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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
FAMOUS FIXINS, INC.
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(Name of Small Business Issuer in its charter)
New York 133865655
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
250 W. 57th Street, Suite 2501 New York, New York 10107
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 245-7773
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
N/A N/A
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Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.0.001 per share
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(Title of Class)
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FAMOUS FIXINS, INC.
FORM 10-SB
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis or Plan of Operation 32
Item 3. Description of Property 35
Item 4. Security Ownership of Certain Beneficial Owners and 35
Management
Item 5. Directors, Executive Officers, Promoters and Control 37
Persons
Item 6. Executive Compensation 40
Item 7. Certain Relationships and Related Transactions 46
Item 8. Description of Securities 48
PART II
Item 1. Market Price of and Dividends on the Registrant's Common 54
Equity and Other Shareholder Matters
Item 2. Legal Proceedings 55
Item 3. Changes in and Disagreements with Accountants 55
Item 4. Recent Sales of Unregistered Securities 55
Item 5. Indemnification of Directors and Officers 60
PART F/S
Financial Statements 67
PART III
Item 1. Index to Exhibits 95
Item 2. Signatures 97
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INTRODUCTORY STATEMENT
Famous Fixins, Inc. is filing this Amendment No. 1 to Form 10-SB on a
voluntary basis to make available reportable information about the Company to
existing shareholders and others interested in the activities of the Company,
and is filing at this time in an attempt to comply with the OTC Bulletin
Board Eligibility Rule for continued quotation of the Company's common stock
on the OTC Bulletin Board.
PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
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Famous Fixins, Inc. (the "Company" or "Famous Fixins") is a New York
corporation which was originally incorporated on February 9, 1984 under the
laws of the State of Utah as Straw Dog, Inc. Pursuant to a registration with
the Utah Securities Division effective September 26, 1984, one million
(1,000,000) shares of common stock were sold to the public at a price of $.02
per share. On November 4, 1985, the Company changed its name to Tinderblock,
Inc. On July 31, 1995, the Company reincorporated under the laws of the
State of Nevada by merging with Spectrum Resources, Inc. Under the terms of
the merger and incorporation, all of the 7,666,666 outstanding shares of the
Company's common stock were exchanged for shares of the common stock of
Spectrum Resources, Inc. at the rate of one (1) share of Spectrum Resources,
Inc. for every three (3) shares of Tinderblock, Inc. following which there
were 2,555,887 shares of common stock issued and outstanding. On October 20,
1995, the Company's Board of Directors approved a one (1) for ten (10)
reverse split of stock, after which there were 255,588 shares of common stock
issued and outstanding.
On January 12, 1996, pursuant to a resolution of the Company's Board of
Directors, the Company issued 354,930 shares of common stock to Phoenix
Pacific Property Trust as consideration for certain services and costs
incurred by Phoenix Pacific Property Trust on behalf of the Company in
connection with maintaining the Company as an active corporation and in good
standing and providing business development and financing consulting advice to
the Company.
The Company did not engage in any substantive business activity from
approximately April 6, 1996 to May 28, 1998.
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On May 28, 1998, the Company acquired Famous Fixins, Inc., a privately-
held New York corporation formed on November 29, 1995 ("FFNY") in a
transaction viewed as a reverse acquisition. FFNY was a promoter and
marketer of celebrity endorsed food products, which commenced business
activities in 1995 and began sales operations in March 25, 1997. Pursuant to
a Plan and Agreement of Reorganization, the Company issued 5,494,662 shares
of common stock to Jason Bauer, as trustee for certain shareholders of FFNY,
in exchange for 4,104,328 shares of the outstanding common stock (representing
approximately ninety seven percent (97%) of the 4,237,039 outstanding shares)
of FFNY. Pursuant to the reorganization, certain FFNY shareholders became
the controlling shareholders of the Company, all of the officers and directors
of the Company resigned and elected the nominees of the FFNY shareholders in
their places, and FFNY became a majority-owned subsidiary of the Company.
On June 8, 1998, the Company changed its name to Famous Fixins, Inc.
under the laws of the State of Nevada. On November 16, 1998, the Company
reincorporated under the laws of the State of New York by merging into its
wholly-owned subsidiary, Famous Fixins Holding Company, Inc., a corporation
formed for the purpose of reincorporation. On November 20, 1998, the Company
merged with its New York subsidiary, FFNY. On November 20, 1998, the Company
changed its name to Famous Fixins, Inc. under the laws of the State of New
York. The Company is now a single entity operating under the laws of the
State of New York as Famous Fixins, Inc. Except where the context otherwise
indicates, the Company and its former subsidiaries are collectively referred
to herein as "Famous Fixins" or as the "Company".
As of October 12, 1999, 10,515,815 shares of the Company's common stock
were issued and outstanding, and 2,941,828 options and warrants to purchase
shares of the Company common stock were issued and outstanding, of which
1,101,828 options and warrants are presently exercisable.
To management's knowledge, the Company has not been subject to
bankruptcy, receivership or any similar proceedings.
(b) Business of Issuer
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The Company is a promoter and marketer of celebrity and athlete endorsed
food products for sale in supermarkets and over the Internet. The Company's
plan is to develop, market and sell specialty food products based on the
diverse professional, cultural and ethnic backgrounds of various celebrities.
The Company represents celebrities and creates food products which include a
line of breakfast cereals endorsed by high profile athletes and a line of
salad dressings. The Company promotes and markets its products directly to
supermarket chains. The Company also operates an electronic commerce site
from which the Company's products may be purchased. The Company utilizes a
nationwide network of food brokers to distribute its products in supermarket
chains, restaurants and specialty retail stores throughout the United States.
The Company enlists a third party manufacturer to produce the Company's food
products.
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The Company has recently significantly increased its roster of high
profile celebrities and athletes who endorse food products that the Company
promotes and markets. Famous Fixins' current roster includes superstar
athletes Sammy Sosa of the Chicago Cubs, Cal Ripken, Jr. of the Baltimore
Orioles, Barry Bonds of the San Francisco Giants, Alex Rodriguez of the
Seattle Mariners, Jeff Bagwell, Craig Biggio, and Ken Caminiti of the Houston
Astros, Derek Jeter of the New York Yankees, Alonzo Mourning of the Miami
Heat, Jake Plummer of the Arizona Cardinals, Peyton Manning of the
Indianapolis Colts, Tim Duncan of the San Antonio Spurs, the New York Mets
baseball team, John Elway, formerly of the Denver Broncos, and Academy Award
Winner actress Olympia Dukakis.
Each of Famous Fixins' athlete celebrities donates a portion of the
royalties that they receive back to the community. Below is the list of
charities and foundations that each athlete has chosen:
Sammy Sosa The Sammy Sosa Charitable Foundation
Cal Ripken, Jr. The Kelly & Cal Ripken, Jr. Foundation
Barry Bonds Bay Area Charities
Alex Rodriguez The Boys Club of Seattle and Greater Miami
Jeff Bagwell, D.A.R.E.
Craig Biggio, and
Ken Caminiti
Derek Jeter Turn 2 Foundation
Jake Plummer The Jake Plummer Foundaiton
Peyton Manning Pey Back Foundation
Alonzo Mourning Zo's Summer Grove Charity
Tim Duncan The Children's Shelter of San Antonio
New York Mets Various charities selected by the Mets
John Elway The Elway Foundation
(1) Principal products or services and their markets.
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Breakfast Cereal
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The cereal category is the largest category in the food industry, with
national sales exceeding seven billion dollars per year. There are more than
100 cereals nationally distributed, however, Famous Fixins' select cereals
are endorsed by well-known athletes, and therefore, require little
advertising in each marketplace.
Sammy Sosa. The Company entered into a contract with Chicago Cubs
baseball player Sammy Sosa for the rights to produce a breakfast cereal. The
Company launched "Slammin' Sammy's Frosted Flakes" in June 1999 in a limited
edition collector's box commemorating Sammy's 66 home runs. This product was
launched mid-June, in the Chicago area initially, with national and
international distribution to follow. To date, the Company has shipped more
than $500,000 wholesale cost of the Slammin' Sammy's Frosted Flakes cereal to
accounts in the Chicago area.
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Cal Ripken, Jr. The Company has a contract with Baltimore Orioles
baseball player Cal Ripken Jr. for the rights to manufacture and distribute a
cereal bearing his name and likeness, "Cal's Classic O's", in the Baltimore
area. In April 1999, the Company launched "Cal's Classic O's," a honey-nut
toasted oats cereal in a limited-edition collector's box, for distribution in
the Baltimore/Washington area. In the first three weeks of distribution, the
Company shipped $250,000 wholesale cost of Cal's Classic O's cereal to
supermarkets in that area.
Alex Rodriguez. The Company entered into a contract with Alex
Rodriguez, the All-Star shortstop of the Seattle Mariners, for the exclusive
rights to manufacture and distribute a cereal bearing his names and likeness
and highlighting his Major League Baseball career. The Company launched
"A-Rod's 40/40 Crunch" in the Seattle and surrounding markets in July of 1999
commemorating A-Rod's 40 stolen bases and 40 home runs in one season.
"A-Rod's 40/40 Crunch" is a frosted flakes cereal packed in a limited-edition
collector's box commemorating A-Rod's baseball accomplishments.
Barry Bonds. The Company entered into a contract with San Francisco
Giants baseball player Barry Bonds for the production of "Barry's MVP
Crunch," a frosted flakes cereal in a limited-edition collector's box
commemorating Barry Bonds' three Most Valuable Player awards. This product was
launched in August 1999 in the Northern California area.
Ken Caminiti, Jeff Bagwell, and Craig Biggio. The Company entered into
a contract with three Houston Astros baseball players, Jeff Bagwell, Craig
Biggio and Ken Caminiti, for the exclusive rights to manufacture and
distribute a cereal collectively bearing their names and likeness and
highlighting their baseball careers. The Company launched "Houston's Triple
Play," a honey-nut toasted oats cereal in a limited-edition collector's box
in July 1999.
Derek Jeter. The Company entered into an agreement with Derek Jeter,
shortstop for the New York Yankees, for the production of a breakfast cereal
called "Jeter's". The Company launched this frosted flakes cereal in October
1999 in the New York market.
Alonzo Mourning. Alonzo Mourning, the Miami Heat basketball player and
a four-time NBA All-Star will be launching his new cereal, "Zo's O's," in the
Miami area in late fall 1999. "Zo's O's" will be packaged in a limited
edition collector's cereal box, commemorating Mourning's outstanding 1999
NBA season. In the 1999 NBA season, Mourning led the league in blocks and
was named the league's Defensive Player of the Year.
Jake Plummer. The Company entered into a contract with Jake Plummer,
quarterback of the Arizona Cardinals, for the exclusive rights to manufacture
a breakfast bearing the name and likeness of Jake Plummer. The Company
launched "Jake's Flakes", a frosted flakes cereal in October 1999 in the
Arizona and Idaho markets.
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Peyton Manning. The Company has an agreement with Peyton Manning,
quarterback of the Indianapolis Colts, for the exclusive rights to
manufacture a breakfast cereal bearing the name and likeness of Peyton
Manning. The Company launched "Peyton's O's", a honey-nut toasted oats
cereal, in October 1999 in the Indianapolis and Tennessee markets.
Tim Duncan. The Company entered into a contract with Tim Duncan, center
of the 1998-1999 NBA champion San Antonio Spurs for the exclusive rights to
manufacture a breakfast bearing his name and likeness. The Company is in the
final stages of development of "Slam Duncan's" and is expected to launch this
cereal in January 2000 in the San Antonio, Texas market.
New York Mets. The Company has an agreement with Doubleday Enterprises,
L.P., owner and operator of the New York Mets National League Baseball team,
for promotional rights during the 1999 and 2000 baseball seasons to produce
and sell a cereal product identified by the name and logos of the Mets. The
cereal product may feature the images of eight or more Major League Baseball
players on the Mets, and at least one version of the cereal product will
feature Mets catcher Mike Piazza. The Company launched "Amazin' Mets Frosted
Flakes" cereal in New York on October 1, 1999.
John Elway. The Company entered into a contract with JAE Endorsements
Inc. for the exclusive rights to manufacture a breakfast bearing the name and
likeness of John Elway, the former quarterback of the two-time Super Bowl
Champion Denver Broncos. The Company is in the final stages of development of
"John Elway's Quarterback Crunch" and is expected to launch this honey-nut
toasted oats cereal in November 1999 in the Denver, Colorado market.
Merchandise Sales
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On the back panel of all of its cereal boxes, the Company offers for
sale various types of merchandise related to the product's name, such as T-
shirts and hats with the cereal's name. By utilizing a direct-mail order
form, the Company is also gathering a database of customers for future use to
inform customers of the Company's other athlete endorsed products that are
available for sale.
Salad Dressings
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The Company's initial product line was Olympia Dukakis' Greek Salad
Dressings, which the Company began selling in April 1997. Developed
exclusively for the Company, the Olympia Dukakis' Greek Salad Dressings are
based on Ms. Dukakis' family recipe passed down through many generations.
Made to enhance the traditional Greek salad, the Dukakis line of salad
dressings is unlike others currently on the market. The Dukakis line
consists of four salad dressings, all made with natural ingredients and
containing no preservatives: Greek, Light Greek, Creamy Feta and Light Creamy
Feta. The Greek and Light Greek dressings blend imported extra virgin olive
oil with special herbs and spices, and the Creamy Feta and Light Creamy Feta
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dressings have the added touch of premium quality cheeses. The Company
believes that real feta cheese, which is included in all four varieties,
makes these products unique. The products also contain extra virgin olive
oil, which has seen a great resurgence in the marketplace, on the strength of
consumer sensitivity to healthy eating. The light versions of the dressings
contain half the fat and calories of the regular varieties.
According to Information Resources Inc. of Chicago, Illinois, a market
research company, for the fifty-two weeks ending October 12, 1997, bottled
salad dressings had supermarket sales of $1.51 billion, which is a 2.9 %
increase over the previous year. During that time period, unit sales
increased by 2.4% to more than 585 million bottles. More than 250 companies
are active in this category. With all of the companies in this category,
there are very few Greek dressings available. However, of the ones that are
on the market, the Company is not aware of any made with real feta cheese,
extra virgin olive oil and red wine vinegar, as are those of the Company.
Also, many of these other dressings are produced by local restaurants, made
in small batches and sold locally. The Company's products are designed to be
mass produced and to be sold and advertised nationally.
Since the launch of the Olympia Dukakis' Greek Salad Dressings in April
1997, the Company has achieved distribution for the Dukakis line to over
2,000 supermarkets throughout the United States. The Company has been
successful in having articles written about the Company and its products
in more than 150 newspapers and magazines across the country. The Company
was the subject of an article in the February 2, 1998 issue of Business Week
magazine. In addition, Ms. Dukakis has appeared and promoted the Company's
products on numerous nationally broadcast television shows, including The
Rosie O'Donnell Show and Access Hollywood. These media vehicles have played
an important role in alerting consumers to the Company's new products.
celebrityfixins.com
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On April 7, 1999, the Company launched "celebrityfixins.com", the
Company's Internet marketing division intended to be an online supermarket
for celebrity endorsed food products. Celebrityfixins.com presently offers
"Olympia Dukakis Greek Salad Dressings", Sammy Sosa's "Slammin' Sammy's
Frosted Flakes", Cal Ripken Jr.'s "Cal's Classic O's", "Houston's Triple Play
Cereal", Alex Rodriguez's "A-Rod's 40/40 Crunch", Derek Jeter's "Jeter's",
Barry Bond's "Barry's MVP Crunch", Jake Plummer's "Jake's Flakes", Peyton
Manning's "Peyton's O's", the New York Met's "Amazin' Mets Frost Flakes
Cereal", and various t-shirts and hats related to each cereal. The Company
also plans to feature a Celebrity Food of the Month Club. Through
celebrityfixins.com, consumers will be able to purchase individual items, and
personalized gift baskets consisting of a variety of celebrity food products.
This electronic commerce service provides the Company an opportunity to reach
consumers in regions of the United States where the Company's products are not
carried in supermarkets.
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Growth of the Internet and Electronic Commerce. The Internet and the
World Wide Web have significantly altered the business environment for
companies of all sizes. The Internet has emerged as a significant global
communications medium, enabling millions of people to share information and
conduct business electronically. A number of factors have contributed to the
growth of the Internet and its commercial use, including: the large and
growing installed base of personal computers in homes and businesses;
improvements in network infrastructure and bandwidth; easier and cheaper
access to the Internet; increased awareness of the Internet among consumer
and business users; and the rapidly expanding availability of online content
and commerce which increases the value to users of being connected to the
Internet. Individuals and corporations increasingly rely upon computer
networks, the Internet, intranets and direct broadcast systems to access
information, entertainment and data in a digital form from their homes and
workplaces.
The increasing functionality, accessibility and overall usage of the
Internet have made it an attractive commercial medium. Businesses can more
easily reach buyers and buyers can reach businesses with immediacy and
efficiency with the Internet. The changes introduced by this new commercial
medium to traditional means of doing business will encourage more companies
to take advantage of it. The Company believes that this trend towards
Internet commerce will accelerate and that it will be applicable to the sellers
of both "hard goods" products and services as well as the sellers of
"soft goods" products, such as software and reference information. According
to International Data Corporation ("IDC"), the number of Internet users
worldwide will grow from an estimated 69 million at the end of 1997 to an
estimated 320 million by 2002. IDC estimates that the total value of goods
and services purchased over the World Wide Web worldwide will increase from
an estimated $12.4 billion in 1997 to an estimated $133 billion in 2000 and
to an estimated $425 billion by 2002.
Grocery Retailing. Interactive grocery services is an emerging
business category. The United States retail supermarket business represented
approximately $311.7 billion in revenues in 1995, according to Progressive
Grocer's 1996 Marketing Guidebook. Recent sales growth in the industry has
only slightly exceeded inflation, while competition is intense and margins
continue to be narrow. At the same time, consumers are increasingly time
constrained and searching for conveniences to make their daily living easier.
A 1995 survey by Andersen Consulting suggests that approximately 30% of
consumers would pay a service fee for information, electronic ordering, such
as by computer, fax or phone, and grocery delivery services. As a result of
these factors, supermarket operators are searching for innovative ways to
differentiate their stores through additional consumer services, while at the
same time seeking opportunities to enhance their profits. Many such
operators are implementing or beginning to experiment with online shopping
and home delivery. A survey of supermarket operators cited in a September
1995 Supermarket Business estimated that supermarket home shopping sales are
minuscule, but would represent approximately 5.5% of total grocery sales by
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the year 2000. The Company did not sponsor any of the market research and
surveys described above and does not have and is not aware of more current
market information on grocery services.
Marketing Programs
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The Company intends to gain distribution of its products to
approximately 6,000 supermarkets throughout the country. The Company plans
to use a combination of paid media advertising, newspaper articles, and
television appearances by its celebrities and athletes in its effort to have
consumers become aware of the Company's products and expand distribution
nationally.
The Company's publicist generates consumer awareness of the Company's
products using traditional marketing methods as well as innovative and
industry specific methods. Since the Company's inception, over 1,000
newspapers and magazines have written articles about the Company, its
products, and the charities involved. The Company's celebrity endorsees have
also been on numerous nationally televised TV shows promoting their products
in addition to hundreds of mentions on local radio stations. The Company has
a strategic alliance with Planet Hollywood International Inc., through which
"launch parties" are held at the local Planet Hollywood restaurant in each
new market to introduce members of the trade and press to the product and the
celebrity whose products are being introduced.
As an incentive for consumer purchase, the Company produces instant
winner cards and seeds them randomly in the boxes of cereals. Consumers can
win various types of prizes, including autographed memorabilia and a chance
to meet the athlete endorsees.
The Company has licensed the rights from Major League Baseball
Properties to create official Major League Baseball commemorative baseball
cards, which may be produced in conjunction with new products pursuant to
contracts with baseball players. These cards are seeded randomly in the
Company's cereal products, giving consumers an added incentive to purchase
the products.
In each market, the Company intends to provide the local supermarket
chains various autographed memorabilia to be used for in-store promotions for
their consumers as well as incentives for store managers to put up displays
of the cereals.
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(2) Distribution methods of the products or services.
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The Company presently employs a direct method of distribution for most
its sales, whereby the product is shipped directly from the manufacturing
facility to the supermarket chain's warehouses. As a secondary form of
distribution, in circumstances where the direct distribution method cannot be
achieved, the Company uses a distributor, whereby the Company ships the
product to independent distribution companies who bear the responsibility for
delivery to the retail stores. The latter method of distribution increases
the retail price to the consumer by approximately 30%.
The Company utilizes a network of food brokers who work on a commission
basis. The Company has a marketing agreement with Crown Prince, Inc., dated
December 7, 1998, under which Crown Prince, Inc. provides consultation and
oversight services, as well as administrative and marketing support, in
connection with the distribution of the Company's products. Crown Prince,
Inc. is a national food company in business for over 50 years. Pursuant to
this agreement, and through an existing national sales force and broker
network, Crown Prince is to manage and distribute Famous Fixins' current and
future food products in supermarkets and specialty stores throughout the
country. Under the agreement, Crown Prince, Inc. receives commissions on net
sales at the rate of: seven percent (7%) for Olympia Dukakis Green Salad
Dressings, and at least three percent (3%) for all other products lines.
Under the agreement, the Company may also be responsible for invoicing,
shipping and inventory management expenses and for miscellaneous costs
incurred by Crown Prince, Inc.
The Company has an agreement for the use of Crown Prince's national
sales team to represent the Company's current and future products.
Crown Prince National Sales Team
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Howard Brown Director of Sales & Marketing
Gary Gruettner National Sales Manager
John DeSimone Regional Sales Manager North-East
Joe Bennett Regional Sales Manager South-East
Ed Leavister Regional Sales Manager Mid-West
Jim O'Toole Regional Sales Manager South-West
Larry DeMarco Regional Sales Manager West Coast
(3) Status of any publicly announced new product or service.
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The Company is in the development stages of three new breakfast cereal
products. Upon development and approval of the licensors, the Company
expects to launch Alonzo Mourning's "Zo's O's," in the Miami area in the late
fall of 1999, "John Elway's Quarterback Crunch" in November 1999 in the
Denver, Colorado market, and Tim Duncan's "Slam Duncan's" in January 2000 in
the San Antonio, Texas market.
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The Company is currently negotiating with other high profile
celebrities and athletes, and anticipates the development and marketing of
additional new products. The Company will create new products under
exclusive licensing agreements with these celebrities and athletes, using
their likenesses and professional and cultural backgrounds.
(4) Competitive business conditions.
There are many other companies offering services and food products
similar to the services and products contemplated by the Company. In
addition, additional companies may seek to enter this business if the Company
succeeds in its plan of development. Many other companies in competition
with the Company have resources and experience far greater than those of the
Company.
(5) Sources and availability of raw materials and principal suppliers.
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The Company uses Jasper Foods, located in Jasper, Missouri, as its
cereal manufacturer, and T. Marzetti Foods, located in Canton, Ohio, as its
salad dressing manufacturer. The Company engages a third-party, private-
label manufacturer to produce its products according to the specifications
and product formulas provided by the Company to such manufacturer. The
Company has not experienced and does not anticipate any difficulty in meeting
its current and anticipated sales objectives. Manufacturing facilities are
subject to regulations promulgated by the Food and Drug Administration. The
Food and Drug Administration and state regulatory agencies inspect the
facilities of manufacturers on a routine basis for regulatory compliance.
There can be no assurance that the third-party manufacturer can satisfy these
requirements.
(6) Dependence on one or a few major customers.
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Although the Company targets its products to a large number of
supermarkets and upon a broad customer base to whom it sells relatively small
quantities of its products, in 1998, two customers, Giant of Maryland and C&S
Wholesale, accounted for approximately thirty percent of its sales, and, in
1999, Jewel Supermarkets accounted for more than ten percent of the Company's
sales to date. These customers purchased the Company's products in blocks
and there is no on-going agreement for these customers to purchase the
Company's products; therefore, the Company does not believe that loss of any
one of these customers would have a material adverse affect on the Company's
operations.
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(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration.
-------------------------------------------------
The Company has licensing agreements with all of its celebrities and
athletes for the production and sale of various food products and merchandise
related to the food products. In addition, the Company has an agreement with
Major League Baseball Properties for the rights to use team logos and the
Major League Baseball logo on all of the Company's current product lines with
baseball players. The Company has a license from Major League Baseball
Players Association for group licensing rights which is required when using
more than two Major League Baseball players in one year.
The Company's future success depends in part upon its ability to use
the name and likeness of celebrities. The Company seeks to protect its
intellectual property rights and to limit access to its proprietary
information through a combination of copyrights, and nondisclosure and
licensing arrangements, all of which, even if available, afford only limited
protection. There can be no assurance that the steps taken by the Company to
protect its intellectual property rights will be adequate to prevent
misappropriation of its intellectual property rights. The Company faces
certain risks because the Company is a licensee of the names and likeness of
certain celebrities, and not the owner of certain intellectual property
rights. The Company will need to secure the rights from third parties, such
as the athletes and celebrities, Major League Baseball Players Association,
and Major League Baseball Properties, if the Company desires to use their
respective logos. In the event the Company is unable to secure such third
party rights or consents, the Company's ability to market and promote its
products, as well as the Company's business, financial condition and
operation results will be materially adversely affected.
Celebrity Athlete Licenses
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Material provisions of each of the licenses with the celebrity athletes
are set forth below. The license agreements may also provide that the
financial terms are confidential. In general, although the individual
license agreements may vary in terms of the structure of compensation, each
license agreement with individual athletes provides substantially for the
following: (i) a negotiated percentage of the gross sales, gross receipts or
the invoice price of total shipments of the product, in no case exceeding
twelve and one-half percent; (ii) on all related merchandise from the back
panel of the cereal products and other promotional materials, a negotiated
percentage of the gross sales, in no case exceeding the difference between
gross sales and twenty five percent (25%) of gross profits; and (iii) five
year warrants or options to purchase a negotiated number of shares of the
Company's unregistered and restricted common stock, and the licenses may also
provide for registration rights as to the common stock into which the warrants
and options may be exercised. Because the Company does not make an up-front
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cash payment to any celebrity athlete licensor to induce the licensor the
enter a license, the Company negotiates with each licensor an the exercise
price for the warrants or options that may be substantial below the market
price of the Company's common stock on the date of grant. The present
outstanding licenses provide for exercise prices between $.15 and $.50 per
share. The Company may be obligated to issue additional five year warrants on
terms comparable to the original grant of warrants upon the automatic
extension of the license period of the licenses that provide for automatic
renewal if certain sales goals are achieved.
Cal Ripken. The Company has a worldwide license with The
Tufton Group ("Tufton"), dated as of April 1, 1999, to launch a line of
limited edition cereal product entitled "Cal's Classic O's Honey Nut Toasted
Oat Cereal" and related merchandise bearing the name and likeness of Calvin
E. Ripken, Jr. Under the agreement, the Company has the non-exclusive right,
license, and privilege to utilize the name, picture, visual representation,
biography, performance statistics, facsimile signature, nickname and
photographic image of Mr. Ripken on the Company's products. The Company
donates one side panel of the cereal box for a personal message from The
Kelly & Cal Ripken, Jr. Foundation, with information for the public to
contact the foundation for additional donations. Upon expiration or
termination of the agreement, the Company shall not use or re-use the cereal
product, advertising, or promotional materials without the express written
consent of The Tufton Group. The Company is required to indemnify Tufton and
Mr. Ripken jointly and severally against any claims, losses, suits,
liabilitites, obligations, costs and expenses arising out of the agreement.
The Company is required to maintain, at its own cost and expense, general
liability insurance protecting Tufton and Mr. Ripken from any claims or suits
arising out of the agreement in an amount of the greater of at least one
million dollars or the Company's standard policy limit, and to name Tufton and
Mr. Ripken as additional insured parties. The Company may terminate the
agreement upon written notice for a material breach of the agreement by Tufton
and Tufton's failure to cure within five business days after. Tufton may
terminate the agreement upon written notice, and the Company's failure to cure
within fifteen business days, if the Company: fails to make timely payment;
fails to deliver quarterly sales statements; breaches any material term of the
agreement. The agreement is for a term of one year, subject to automatic
renewal for one additional year if certain sales goals are met.
Major League Baseball Players Association. Under a non-exclusive, non-
transferable, non-assignable promotional license agreement with the Major
League Baseball Players Association ("MLBPA"), dated as of June 10, 1999, the
Company has group licensing rights to use the names, nicknames, likenesses,
signatures, pictures, numbers, playing records and biographical data of eight
or more active baseball players and to use the logo, name and symbol of MLBPA,
Major League Baseball Players Association, and MLB Players Choice Logo in
connection with the Company's cereal products. The license territory is the
United States, its possessions and territories, Canada and the Caribbean.
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The license fee is $125,000. In addition, MLBPA is entitled to receive a
thirteen and one-half percent royalty on the Company's baseball trading cards
inserted into the cereal boxes, and ten percent on other promotional items
using the rights granted under the license. Interest accrues at one and one-
half percent per month for any late payments made by the Company to MLBPA.
The Company is obligated to defend, indemnify and hold harmless MLBPA, its
members, offices, directors, employees and agents from and against any and all
claims, demands, causes of action and judgments arising out of or in
connection with: (a) the Company's products using the rights granted under
the license; (b) the Company's use of intellectual property rights claimed to
be the property of any Major League Baseball club or other entity affiliated
with any Major League Baseball club; and (c) any defects in the Company's
products pursuant to this license. The Company is required to obtain the
prior written consent of MLBPA if it seeks to settle or compromise any claim
covered by the indemnification provision. MLBPA and its members shall have
the right to defend themselves in any such action or proceeding with attorneys
of MLBPA's selection. The Company is required to obtain and maintain
comprehensive general liability insurance naming MLBPA and its members as an
additional insured parties in an amount of at least two million dollars for
each single occurrence. MLBPA has the right immediately to terminate the
agreement by giving written notice if the Company: manufactures, advertises,
promotes, ships, distributes or uses any material without the prior written
approval of MLBPA; uses any material after receipt of notice that MLBPA
disapproves of the material; fails to carry on the materials the notices
specified by MLBPA; becomes subject to any voluntary or involuntary order of
any governmental agency involving the recall of any of its products because of
safety, health or other hazards or risks to the public; takes any action in
connection with the Company's products that damages or reflects adversely upon
MLBPA or its rights and its trademarks; breaches any provision of the
agreement relating to the unauthorized assertion of right in the rights or
trademarks; fails to obtain or maintain insurance; or the rights granted under
the license in a manner inconsistent with the agreement. The Company may
terminate the agreement upon giving written notice if MLBPA breaches and fails
to cure within fifteen days a material term of the agreement. The license
period ends on April 14, 2000. The Company intends to renew the group
licensing rights or enter into a similar agreement for an additional license
period beginning April 14, 2000, unless the Company discontinues the promotion
and sale of products featuring Major League Baseball players.
The Company has a license with Major League Baseball Properties, Inc.
("MLBP") granting the Company the non-exclusive license to use the names, word
marks, logos, uniform designs, colors and color combinations, trade dress,
characters, symbols, designs, likenesses, visual representations and such
other similar or related identifications of Major League Baseball Properties,
Inc., Baltimore Orioles, Chicago Cubs, Houston Astros, San Francisco Giants,
and Seattle Mariners in connection with the manufacture, distribution,
promotion, advertisement and sale of the Company's cereal products and the
baseball trading cards contained in the cereals: featuring Cal Ripken in the
States of Maryland, Virginia, North Carolina, South Carolina, and Florida, the
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City of Philadelphia, and the District of Columbia, which license right
Expires on December 31, 1999; featuring Jeff Bagwell, Craig Biggio, and Ken
Caminiti in the States of Texas, Florida and the City of New Orleans, which
license right expires on December 31, 1999; featuring Barry Bond in Arizona
and Northern California, which license right expires on December 31, 1999;
featuring Alex Rodriguez in Washington and the City of Miami, which license
right expires on December 31, 1999; and featuring Sammy Sosa in the United
States, which license right expires on April 30, 2000. The Company is
required to pay a minimum guaranteed compensation to MLBP, against which
royalties are credited, of $125,000 for the rights granted under the
agreement, of which $100,000 is due on December 31, 1999, and $25,000 is due
on April 30, 2000. The Company is required to pay royalties to MLBP for the
following cereal products as follows: the greater of one percent of net sales
or $.025 per cereal box sold on the cereal product featuring Cal Ripken; two
percent of net sales on the cereal products featuring Jeff Bagwell, Craig
Biggio, and Ken Caminiti, Barry Bond, and Alex Rodriguez; and the greater of
two and one-half percent of net sales or $.0545 per cereal box sold on the
cereal product featuring Sammy Sosa. Interest at one percent per month or the
highest prime lending rate of Chase Manhattan Bank accrue on late payments.
Under the agreement, MLBP has agreed to indemnify, defend and hold the Company
and its owners, shareholders, directors, officers, employees, agents,
representatives, successors and assigns harmless from any claims, suits,
damages or costs arising from challenges to MLBP's authority to license the
rights granted to the Company or assertions to any claim of right or interest
in or to the rights granted to the Company and used on the Company's products,
provided that the Company gives prompt written notice, cooperates and assists
in any such claim or suit, and provided further that MLBP has the option to
undertake and conduct the defense of, and to settle, any such suit at its sole
discretion. Under the agreement, the Company has agreed to indemnify, defend
and hold MLBP, the Major League Baseball Clubs, the Leagues and the Office of
the Commissioner of Baseball and their respective owners, shareholders,
directors, officers, employees, agents, representatives, successors and
assigns harmless from any claims, suits, damages and costs arising out of:
any unauthorized use of or infringement of any trademark, service mark,
copyright, patent, process, method or device by the Company in connection with
the licensed products; alleged defects or deficiencies in, or the use of, the
licensed products; false advertising, fraud, misrepresentation or other claims
related to the licensed products; the unauthorized use of the licensed rights
or any breach by the Company of the agreement; libel or slander against, or
invasion of the right of privacy, publicity or property of, or violation or
misappropriation of any other right of any third party; or agreements or
alleged agreements made or entered into by the Company to effectuate the terms
of the agreement; provided that MLBP gives the Company notice of the making of
any claim or the institution of any action and MLBP may at its option
participate in any action. MLBP has the right to terminate the agreement
without any right to cure if: the Company fails to obtain or maintain
liability insurance; if any governmental agency or court of competent
jurisdiction finds that the licensed products are defective; if the Company
breaches certain undertakings pursuant to the license; or the Company
undergoes a change in majority or controlling ownership. MLBP has the right
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to terminate the agreement if the Company defaults on, and fails to cure
within ten business days, the following occurrences: the Company fails to
make timely payment; the Company fails to deliver an accounting statement
or to give access to the Company's premises or license records; the Company is
unable to pay its debts when due; the Company makes any assignment for the
benefit of creditors or an arrangement pursuant to any bankruptcy law; the
Company files or has filed against it any petition under the bankruptcy or
insolvency laws of any jurisdiction, county or place, or shall have or suffer
a receiver or trustee to be appointed for its business or property, or be
adjudicated a bankrupt or an insolvent; the Company fails to commence in good
faith to manufacture, distribute and sell each licensed product throughout the
licensed territory within any twelve month period; the Company discontinue its
business as it is now conducted; the Company breaches any term of the
agreement; or the accounting statements furnished to MLBP are significantly or
consistently understated. The Company intends to renew the licensing rights
or enter into a similar agreement for an additional license period in
connection with the Company's products, unless the Company discontinues the
promotion and sale of products featuring Major League Baseball players.
Sammy Sosa. The Company has an exclusive license with Sammy Sosa,
dated as of April 12, 1999, to develop, manufacture, distribute, promote, and
sell up to two editions of a line of limited edition cereal products bearing
his name and likeness in North America and the Caribbean. The Company has
the right to use the name, photograph, characterization, likeness, voice,
image, and biographical data of Licensor, and the trademarks, logos,
copyrights and all other authorized material owned or controlled by Mr. Sosa.
The Company retains all rights, titles, and interests in and to the cereal
products, their formulae and secret ingredients, and their packaging and
labeling. Mr. Sosa is obligated to make a one-hour press conference
appearance. The Company is responsible to pay all costs and expenses in
connection with the development, promotion, manufacturing, packaging,
shipping, distribution, sales and promotion of the cereal products and
related merchandise. The Company is required to maintain an eight million
dollar product liability insurance which cover all the products produced in
connection with this license. The agreement can only be assigned with the
prior written consent of the other party, except that the Company may assign
the assignment to a wholly-owned subsidiary or to an entity owning or
acquiring a substantial portion of the Company's stock or assets. The
agreement provides that the parties shall indemnify the other parties for
actions, claims, suits, losses, judgments, penalties, liabilities, damages,
costs, and expenses arising out of a party's breach of the terms of the
agreement, or through the gross negligence or intentional acts of its
officers, directors, employees, or representatives. The license may be
terminated upon forty-five (45) days written notice if: (a) a party breaches
a material term of the agreement and fails to remedy said breach within
thirty (30) days of its receipt of written notice of the breach; (b) a party
becomes insolvent or files a petition in bankruptcy; (c) the Company
discontinues production and distribution of the products; or (d) Sammy Sosa
becomes the subject of public disrepute or scandal that affects his image.
The agreement terminates on April 14, 2000, subject to automatic renewal for
one additional year if certain sales goals are met.
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Alex Rodriguez. The Company has an exclusive worldwide license with
Alex Rodriguez, dated as of April 28, 1999, to launch a line of limited
edition cereal products bearing his name and likeness. The Company has the
right to use the name, photograph, characterization, likeness, voice, image,
and biographical data of Alex Rodriguez, and the trademarks, logos,
copyrights and all other authorized material owned or controlled by him in
connection with the development, manufacture, distribution, promotion, and
sale of the cereal products and related merchandise. The Company has all
rights, titles, and interests in and to the products, their formulae and
secret ingredients, and their packaging and labeling. Mr. Rodriguez is
obligated to appear for a one-hour photo shoot and press conference. The
Company is responsible for all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the products. The Company is required to maintain an
eight million dollar product liability insurance which cover all the products
produced in connection with this license and name Mr. Rodriguez as an
additional insured party. The agreement can only be assigned with the prior
written consent of the other party, except that the Company may assign the
assignment to a wholly-owned subsidiary or to an entity owning or acquiring a
majority of the Company's stock or assets. The agreement provides that the
parties shall indemnify the other parties for actions, claims, suits, losses,
judgments, penalties, liabilities, damages, costs, and expenses arising out of
a party's breach of the terms of the agreement, or through the gross negligence
or intentional acts of its officers, directors, employees, or representatives.
The license may be terminated upon forty-five (45) days written notice if:
(a) a party breaches a material term of the agreement and fails to remedy said
breach within thirty (30) days of its receipt of written notice of the breach;
(b) a party becomes insolvent or files a petition in bankruptcy; (c) the
Company discontinues production and distribution of the products; (d) the
Company breaches a material term of the agreement two or more times in the
license period; or (e) Alex Rodriguez becomes the subject of public disrepute
or scandal that materially and adversely affects his image. The agreement
expires on December 31, 1999, subject to automatic renewal for one calendar
year if certain sales goals are met.
Ken Caminiti, Craig Biggio, and Jeff Bagwell. The Company has an
exclusive worldwide license with Ken Caminiti, Craig Biggio, and Jeff
Bagwell, dated as of April 29, 1999, to launch a line of limited edition
cereal products bearing their names and likenesses, expiring on April 20,
2000, subject to automatic renewal until April 30, 2001 if certain sales
goals are met. The Company has the right to use the name, photograph,
characterization, likeness, voice, image, and biographical data of the
licensors, and the trademarks, logos, copyrights and all other authorized
material owned or controlled by the licensors in connection with the
development, manufacture, distribution, promotion, and sale of the cereal and
related merchandise, such as hats and T-shirts bearing the name and logo of
the cereal (with no use of the name, likeness, image, photograph, signature
or characterization of any of the individual licensors), which related
merchandise may be sold only by way of direct sales through cereal box
redemption programs, mail order, Internet, or print advertising. The
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Company is responsible for all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the products. The Company has all rights, titles,
and interests in and to the Products, their formulae and secret ingredients,
and their packaging and labeling. The licensors are obligated to make two
personal appearances by way of a photo shoot or press conference. The
Company is required to maintain an eight million dollar product liability
insurance which cover all the products produced in connection with this
license and to name the licensors as additional insured parties on its
general liability insurance policy. The agreement can only be assigned with
the prior written consent of the other party, except that the Company may
assign the assignment to a wholly-owned subsidiary or to an entity owning or
acquiring a substantial portion of the Company's stock or assets. The
agreement provides that the parties shall indemnify the other parties for
actions, claims, suits, losses, judgments, penalties, liabilities, damages,
costs, and expenses arising out of a party's breach of the terms of the
agreement, or through the gross negligence or intentional acts of its officers,
directors, employees, or representatives. The license may be terminated upon
forty-five (45) days written notice if: (a) a party breaches a material term
of the agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) a party becomes insolvent or
files a petition in bankruptcy; (c) the Company discontinues production and
distribution of the products; or (d) any licensor becomes the subject of
public disrepute or scandal that affects the licensor's image.
Barry L. Bonds. The Company has a license with Killer Bee, Inc.
("KBI"), dated as of May 7, 1999, to launch a line of limited edition cereal
product and related merchandise bearing the name and likeness of Barry L.
Bonds for sale worldwide for a term ending December 31, 1999, subject to
automatic renewal for one additional year if certain sales goals are met.
The Company has the right to use the name, photograph, characterization,
likeness, voice, image, and biographical data of Barry L. Bonds, and the
trademarks, logos, copyrights and all other authorized material owned or
controlled by KBI in connection with the development, manufacture,
distribution, promotion, and sale of the cereal and related merchandise. The
Company is responsible for all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the products. The Company has all rights, titles, and
interests in and to the Products, their formulae and secret ingredients, and
their packaging and labeling. Mr. Bonds is obligated to appear at a one-hour
photo shoot and press conference. Under the license, the Company is
obligated to issue a negotiated number of five year warrants to a charity
designated by KBI. The Company is required to maintain an eight million
dollar product liability insurance which cover all the products produced in
connection with this license and to name KBI and Mr. Barry L. Bonds as
additional insured parties. The agreement can only be assigned with the
prior written consent of the other party, except that the Company may assign
the assignment to a wholly-owned subsidiary or to an entity owning or
acquiring a supermajority of the Company's stock or assets. The agreement
provides that the parties shall indemnify the other parties for actions,
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claims, suits, losses, judgments, penalties, liabilities, damages, costs, and
expenses arising out of a party's breach of the terms of the agreement, or
through the gross negligence or intentional acts of its officers, directors,
employees, or representatives. The license may be terminated upon forty-five
(45) days written notice if: (a) a party breaches a material term of the
agreement and fails to remedy said breach within thirty (30) days of its
receipt of written notice of the breach; (b) a party becomes insolvent or
files a petition in bankruptcy; (c) the Company discontinues production and
distribution of the products; (d) The Company breaches a material term of the
agreement two or more times in the license term, regardless of cure; or (e)
Mr. Barry L. Bonds becomes the subject of public disrepute or scandal that
materially and adversely affects Mr. Barry L. Bond's image. The Company is
also required to place the following statement on the cereal box and all
promotional materials related to the products: "50% of the net proceeds to
Mr. Bonds will be donated to Bay Area charities including the Link N' Learn
Program conducted in the San Francisco Bay Area by The Bonds Family
Foundation. Link N' Learn will establish on-site learning centers at 8
public schools and 5 community centers in four Bay Area communities. These
sites will use intensive personalized tutoring techniques and interactive
instructional technology to increase parental involvement and to achieve
measurable grade-level academic improvement among children in theK-4th grades
in the four Bay Area communities."
Derek Jeter. The Company has an exclusive license with Turn 2, Inc.,
dated as of May 31, 1999, to develop, manufacture, distribute, promote, and
sell cereal products bearing his name and likeness in the United States. The
Company has the right to use Jeter's name and likeness in connection with the
advertisement and promotion by Company of the products in television, radio,
print and point of purchase. The Company also has the non-exclusive right to
use Jeter's name and likeness in connection with certain merchandise that may
be featured on the back panel of the endorsed products packaging, subject to
the licensor's sole and exclusive discretion and approval. The side panel of
the products packaging shall feature a charity or other entity of Jeter's
sole choice. All packaging costs shall be the Company's sole responsibility.
The remuneration due to licensor is subject to upward adjustment to conform
with the highest then current remuneration paid by the Company to other Major
League Baseball players, with the exception of certain specified persons,
under similar licenses. Should the Company, at any time or times during the
license period, desire to register a trademark or trademarks which include
Jeter's name and likeness, or which relate in any manner to Jeter, and/or to
register the Company as a user thereof, all costs related to any such
trademarks shall be borne by the Company, and ownership of any such
trademarks shall rest solely in the name of Turn 2 or its designee. Upon
registration of any such trademark, Turn 2 shall grant to the Company a
license for the use of such registered trademark on or in connection with the
advertisement, promotion and sale of the products. The Company is required
to maintain a three million dollar product liability insurance which cover
all the products produced in connection with this license and to name Turn 2,
Turn 2's agent, and Mr. Jeter as additional insured parties. The Company may
assign or transfer this agreement only with the prior written consent of Turn
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2. Turn 2 has the right to terminate the license term for up to sixty days
after it receives notice from the Company that the Company has merged or
consolidated with a third party. The agreement provides that in no event
shall Jeter or Turn 2 be liable to the Company, or any party claiming through
the Company, for any amount in excess of the royalties actually received by
Turn 2 under the license. The agreement provides that the parties are not
liable to each other for special, consequential, indirect, exemplary or
punitive damages, or for a loss of good will or business profits. The
Company is obligated to indemnify Turn 2, its agent, and Mr. Jeter from and
against all expenses, damages, claims, suits, actions, judgments and costs
arising out of the agreement, the Company's breach of the agreement, or the
negligence, actions, errors or omissions of the Company or any claim or
action for personal injury, death or otherwise involving alleged defects in
the Company's products, provided that the Company is given notice of any such
action or claim. The agreement may be terminated by the non-defaulting party
if: (a) the other party fails to make any payment of any sum of money herein
specified to be made and fails to cure within ten days of its receipt of
written notice of its default, or (b) fails to observe or perform any of the
terms of the agreement other than the payment of money and fails to cure
within thirty days of its receipt of written notice of its default. The
right to cure applies only to a first-time default, and the agreement may be
terminated immediately for subsequent defaults. Although the agreement
provides that the licensor has the right to immediately terminate the
agreement if the products are not being distributed nationally to a
significant number of stores by September 1, 1999, the product was launched
in October 1999, at a launch party attended by Derek Jeter at the All Star
Cafe in New York City. The Company believes that the delay in launching of
the product is not a material breach of the termination provision, and the
Company has not received any notice that cancellation of the agreement is
sought on that ground; however, there can be no assurance that the licensor
may seek to terminate the license on the basis of an alleged breach of that
provision. The license terminates on May 31, 2000.
Jake Plummer. The Company has an exclusive worldwide license with Jake
"The Snake" Enterprises, dated as of May 13, 1999, to launch a line of cereal
products bearing his name and likeness. The Company has the right to use the
name, photograph, characterization, likeness, voice, image, and biographical
data of Jake Plummer, and the trademarks, logos, copyrights and all other
authorized material owned or controlled by him in connection with the
development, manufacture, distribution, promotion, and sale of the cereal
products and related merchandise. The Company has all rights, titles, and
interests in and to the products, their formulae and secret ingredients, and
their packaging and labeling. Mr. Plummer is obligated to appear for a press
conference to assist in the promotion of the product. The Company is
responsible for all costs and expenses in connection with the development,
promotion, manufacturing, packaging, shipping, distribution, sales and
promotion of the products. The Company is required to maintain an eight
million dollar product liability insurance which cover all the products
produced in connection with this license and name Mr. Plummer as an
additional insured party. The agreement can only be assigned with the prior
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written consent of the other party, except that the Company may assign the
assignment to a wholly-owned subsidiary or to an entity owning or acquiring a
substantial portion of the Company's stock or assets. The agreement provides
that the parties shall indemnify the other parties for actions, claims,
suits, losses, judgments, penalties, liabilities, damages, costs, and
expenses arising out of a party's breach of the terms of the agreement, or
through the gross negligence or intentional acts of its officers, directors,
employees, or representatives, or including product liability. The license
may be terminated upon forty-five (45) days written notice if: (a) a party
breaches a material term of the agreement and fails to remedy said breach
within thirty (30) days of its receipt of written notice of the breach; (b) a
party becomes insolvent or files a petition in bankruptcy; (c) the Company
discontinues production and distribution of the products; or (d) Mr. Plummer
becomes the subject of public disrepute or scandal that affects his image.
Peyton Manning. The Company has an exclusive license with Pey Dirt,
Inc., dated as of May 31, 1999, to develop, manufacture, distribute, promote,
and sell cereal products bearing his name and likeness in the states of
Indianapolis and Tennessee. The Company has the right to use Manning's name
and likeness in connection with the advertisement and promotion by Company of
the products in television, radio, print and point of purchase. The Company
also has the non-exclusive right to use Manning's name and likeness in
connection with certain merchandise that may be featured on the back panel of
the endorsed products packaging, subject to the licensor's sole and exclusive
discretion and approval. The side panel of the products packaging shall
feature a charity or other entity of Manning's sole choice. All packaging
costs shall be Company's sole responsibility. The remuneration due to
licensor is subject to upward adjustment to conform with the highest then
current remuneration paid by Company to other National Football League
quarterbacks, under similar regional licenses. All costs related to any such
trademarks shall be borne by the Company, and ownership of any such
trademarks shall rest solely in the name of Pey Dirt or its designee. Should
the Company, at any time or times during the license period, desire to
register a trademark or trademarks which include Manning's name and likeness,
or which relate in any manner to Manning, and/or to register the Company as a
user thereof, all costs related to any such trademarks shall be borne by the
Company, and ownership of any such trademarks shall rest solely in the name
of Pey Dirt or its designee. Upon registration of any such trademark, Pey
Dirt shall grant to the Company a license for the use of such registered
trademark on or in connection with the advertisement, promotion and sale of
the products. The Company is required to maintain a three million dollar
product liability insurance which cover all the products produced in
connection with this license and to name Pey Dirt, its agent, and Mr. Manning
as additional insured parties. The Company may assign or transfer this
agreement only with the prior written consent of Pey Dirt. Pey Dirt has the
right to terminate the license term for up to sixty days after it receives
notice from the Company that the Company has merged or consolidated with a
third party. The agreement provides that in no event shall Mr. Manning or
Pey Dirt be liable to the Company, or any party claiming through the Company,
for any amount in excess of the royalties actually received by Pey Dirt under
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the license. The agreement provides that the parties are not liable to each
other for special, consequential, indirect, exemplary or punitive damages, or
for a loss of good will or business profits. The Company is obligated to
indemnify Pey Dirt, its agent and Mr. Manning from and against all expenses,
damages, claims, suits, actions, judgments and costs arising out of the
agreement, the Company's breach of the agreement, or the negligence, actions,
errors or omissions of the Company or any claim or action for personal
injury, death or otherwise involving alleged defects in the Company's
products, provided that the Company is given notice of any such action or
claim. The agreement may be terminated by the non-defaulting party if: (a)
the other party fails to make any payment of any sum of money herein
specified to be made and fails to cure within ten days of its receipt of
written notice of its default, or (b) fails to observe or perform any of the
terms of the agreement other than the payment of money and fails to cure
within thirty days of its receipt of written notice of its default. The
right to cure applies only to a first-time default, and the agreement may be
terminated immediately for subsequent defaults. Although the agreement
provides that the licensor has the right to immediately terminate the
agreement if the products are not being distributed in the contract territory
to a significant number of stores by October 1, 1999, the product was launched
on October 10, 1999, which delay in launching the Company believes is not a
material breach of the termination provision and the Company has not received
any notice that cancellation of the agreement is sought on that ground;
however, there can be no assurance that the licensor may seek to terminate the
license on the basis of an alleged breach of that provision. The license
terminates on May 31, 2000.
Alonzo Mourning. The Company has an exclusive worldwide license with
Alonzo Mourning, dated as of May 10, 1999, to develop, manufacture,
distribute, promote and sell a cereal product bearing his name and likeness.
Under the agreement, the Company has the right to use the name, approved
photograph, likeness, and biographical data of Mr. Mourning. Mr. Mourning
retains all rights in and to the licensed subject matter, and shall may use
the licensed subject matter in connection with the advertisement, promotion,
and/or endorsement of any product or service except for ready-to-eat cereal.
The Company is responsible for all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping distribution,
sales and promotion of the cereal product. The Company has all rights,
titles and interest in and to the cereal product, the formulae and
ingredients, and the packaging and labeling. Mr. Mourning is obligated to
attend one two-hour promotional press conference. The Company also has the
right to produce, manufacture, distribute, and sell certain t-shirts and hats
bearing the logo "Zo's O's", provided that such apparel products are
manufactured by NIKE, Inc. The Company is responsible for any and all costs
associated with the manufacture, promotion, sale, advertisement, and/or
distribution of the apparel products. The Company is required to maintain an
eight million product liability insurance which cover all the products
produced in connection with this license and name Mr. Mourning as an
additional insured party. The agreement can only be assigned with the prior
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written consent of the other party, except that the Company may assign the
assignment to a wholly-owned subsidiary or to an entity owning or acquiring a
majority of the Company's stock or assets. The agreement provides that the
parties shall indemnify the other parties, and that the Company shall
indemnify Falk Associates Management Enterprises, for actions, claims, suits,
losses, judgments, penalties, liabilities, damages, costs, and expenses
arising out of a party's breach of the terms of the agreement, or through the
gross negligence or intentional acts of its officers, directors, employees,
or representatives. The indemnification provision survives the termination
or expiration of the agreement. The license may be terminated upon thirty
days written notice if: (a) a party breaches a material term of the
agreement and fails to remedy said breach within fifteen (15) days of its
receipt of written notice of the breach; (b) a party becomes insolvent or
files a petition in bankruptcy; (c) the Company discontinues production and
distribution of the products; (d) the Company fails to make any timely
payments under the agreement; or (e) Mr. Mourning is convicted of a felony
involving moral turpitude. The license agreement terminates on June 30,
2000.
Tim Duncan. The Company has a non-exclusive worldwide license with Tim
Duncan, dated as of August 27, 1999, granting the Company the right to use
the name, photograph, characterization, likeness, voice, image, and
biographical data of Tim Duncan in connection with the development,
manufacture, distribution, promotion, and sale of a limited edition cereal
product and related merchandise. The Company is required to distribute,
promote, and sell the products, at a minimum, in the greater San Antonio,
Texas area, North Carolina, and the U.S. Virgin Islands, and to provide for
the sale and distribution of products on Tim Duncan's web site,
www.slamduncan.com. The Company is responsible for all costs and expenses in
connection with the development, promotion, manufacturing, packaging,
shipping, distribution, sales and promotion of the products. The Company has
all rights, titles, and interests in and to the cereal product, their
formulae and secret ingredients. Under the agreement, Mr. Duncan is to
appear for a one-hour press conference and launch party during which he is
obligated to autograph 50 personalized jerseys and 150 boxes of the cereal
product for the Company's use as promotional materials. The Company is
required to maintain general liability insurance coverage of at least two
million dollars that survives the term of the license and name Mr. Duncan as
an additional insured party. The agreement provides that the Company shall
protect, indemnify and hold Mr. Duncan, his agents and representatives,
harmless from and against any and all expenses, damages, claims, suits,
actions, judgments and costs arising out of any action or proceeding by any
third party based upon: any act, omission, or material or alleged breach by
the Company of the terms of the license; the Company's use of the material
produced under the agreement; the manufacture, marketing, sale or use of the
products; the Company's unauthorized use of any individual intellectual
property right, trademark, service mark, or copyright in connection with the
licensed subject matter; any materials supplied by the Company in connection
with the services provided by Mr. Duncan under the agreement; or the
-24-
<PAGE>
enforcement of the Company's indemnification obligation. The remuneration
due to Mr. Duncan is subject to upward adjustment to provide the remuneration
that the Company pays any other celebrity licensor for the Company's products
having comparable quantities of products manufactured or sold the Company.
Interest on any late payments to Mr. Duncan will be the lesser four percent
per month or the maximum rate permissible by law. Either party may terminate
the agreement upon forty-five days written notice if the other party breaches
a material term and fails to remedy the breach within thirty days. Mr.
Duncan may also terminate the agreement upon forty-five days written notice
if: the Company becomes insolvent, files a petition in bankruptcy or has a
petition in bankruptcy filed against it which is not dismissed within fifteen
days; the Company discontinues production and distribution of the products;
the Company uses products and materials not approved by Mr. Duncan; or the
Company uses the licensed subject matter in connection with any product or
service for which the Company does not have license rights under the
agreement. The Company may also terminate the agreement if Mr. Duncan is
convicted, after all appeals, of a felony crime involving moral turpitude or
a crime involving use or possession of controlled substances. The license
terminates on the end of the 1999-2000 National Basketball Association
season. If certain sales goals are met, the license is automatically
extended through the 2000-2001 NBA basketball season.
New York Mets. The Company has a promotional agreement, dated
September 10, 1999, with Sterling Doubleday Enterprises, L.P. ("SDE"), owner
and operator of the New York Mets National League Baseball team, for
promotional rights during the 1999 and 2000 baseball seasons in connection
with the sale and marketing of a cereal product identified by the name and
logos of the New York Mets. Under the agreement, the Company must maintain
in effect throughout the term of the agreement a license agreement with the
Major League Baseball Player's Association permitting it to feature the
images of eight or more Major League Baseball players on the cereal product,
and if the Company decides to feature individual players or groups of less
than eight players on the cereal product, the parties will obtain the consent
of each such player featured. In the event that the parties decide to
feature individual Mets players or groups of less that eight players on the
cereal, SDE will cooperate in good faith with the Company's efforts to obtain
the consent of the players for the use of their names and likenesses on the
cereal product. The selection of the participating players shall be as
mutually agreed upon by the parties, with each party's approval not to be
unreasonably withheld. (The parties have agreed that at least one version of
the product will feature Mike Piazza alone, and that such version will be
produced and distributed during at least 12 months within the period from the
date of the agreement through December 31, 2000.) Any compensation required
to be paid to such individual players shall be the responsibility of SDE,
provided that it shall not be unreasonable for SDE to withhold its approval
of any participating player based on the fee required by such player. Under
the agreement, SDE will promote the sale of the cereal product in: one 15-
second advertisement displayed on the Diamond Vision scoreboard at Shea
Stadium, which advertisement will be displayed during each Mets home game
from August 6, 1999 through the end of the regular season, and in the 2000
-25-
<PAGE>
baseball season, the advertisement will be displayed during each regular
season home game at Shea Stadium; two appearances by Mr. Met in 1999 and six
appearances in 2000 at mutually agreed upon retail stores that sell the
cereal product; SDE will allow the Company to distribute product samples at
Shea Stadium turnstiles during three mutually agreed upon regular season home
games in 1999 and five mutually agreed upon regular season home games in
2000; the Company may place advertisements of the cereal product on the backs
of 100,000 Mets pocket schedules in 2000; the cereal product will be
advertised in the 2000 New York Mets Yearbook. Under the agreement, the
Company will receive: the use of a 15-person Diamond View Suite at the
Stadium on one mutually agreed upon game date in 1999, and on three mutually
agreed upon games dates in 2000; four tickets to each of ten mutually agreed
upon Mets regular season home games in 1999 (for a total of 40 regular season
tickets) and the right to purchase four tickets to each of the first three
Mets 1999 playoff games at the Stadium; four tickets to each of 30 mutually
agreed upon regular season Mets home games in 2000 (for a total of 120
tickets); the right to conduct and promote one contest in each of 1999 and
2000 and to award to retail purchasers of the cereal product one grand prize,
three second prizes, and five third prizes for each contest. The grand prize
for the 1999 season is a weekend (two nights) trip for two to Mets spring
training in Port St. Lucie, Florida for which the Company will provide, at
its own expense, round-trip airfare, and SDE will provide hotel
accommodations, a car rental in Port St. Lucie, and two tickets to one spring
training game. The second place prize for 1999 is a Mets jersey autographed
by one player that appears on the 1999 cereal product. The third place prize
for 1999 is four tickets to one Mets regular season home game and the
opportunity to attend that game's batting practice on the field. The grand
prize for 2000 is an opportunity to appear in a non-official Mets team
photograph. The second place prize for 2000 is a "honorary bat boy or bat
girl" for one day (an opportunity to dress in a Mets uniform and to attend
batting practice on the field). The third place prize for 2000 is a National
league baseball signed by a player that appears on the 2000 cereal product.
The agreement shall be automatically renewed on an annual basis unless SDE
elects to terminate the agreement by providing written notice of such
termination on or before December 31, 2000, or on or before any anniversary
thereof, provided that SDE shall provide the same or comparable promotional
support and cooperation during each year during which the agreement remains
in effect.
John Elway. The Company has an exclusive worldwide license with JAE
Endorsements Inc., dated as of September 21, 1999, to develop, manufacture,
distribute, promote, and sell a limited edition cereal product bearing the
name and likeness of John Elway. The Company has the right to use the name,
photograph, characterization, likeness, voice, image, and biographical data
of John Elway, and the trademarks, logos, copyrights and all other authorized
material owned or controlled by JAE Endorsements Inc. in connection with the
development, manufacture, distribution, promotion, and sale of the cereal
product. The Company will also produce and sell merchandise, t-shirts,
sweatshirts, and hats, related to the cereal product. The Company is
responsible for all costs and expenses in connection with the development,
-26-
<PAGE>
promotion, manufacturing, packaging, shipping, distribution, sales and
promotion of the products. The Company is responsible for handling all
fulfillment (including all check, money order and credit card transactions)
and tracking responsibilities from the sale of related merchandise from the
back panel or elsewhere on the packaging or promotional materials of the
cereal product. The Company has all rights, titles, and interests in and to
the Products, their formulae and secret ingredients, and their packaging and
labeling. Under the license, John Elway is to personally autograph 25 flat
cereal boxes for Licensee to use as promotional giveaways. The Company is
required to name John Elway as an additional insured party in its eight
million product liability insurance to cover all of the products produced in
connection with this license bearing his name and likeness, and will maintain
a twenty million umbrella policy naming John Elway as an additional insured
party. The agreement can only be assigned with the prior written consent of
the other party, except that the Company may assign the assignment to a
wholly-owned subsidiary or to an entity owning or acquiring a substantial
portion of the Company's stock or assets. The agreement provides that the
parties shall indemnify the other parties for actions, claims, suits,
losses, judgments, penalties, liabilities, damages, costs, and expenses
arising out of a party's breach of the terms of the agreement, or through the
gross negligence or intentional acts of its officers, directors, employees,
or representatives. The Company is also obligated to indemnify JAE
Endorsements, Inc. and John Elway, except for their negligent acts or
intentional misconduct, from third party claims, actions, suits, demands,
loses, damages and costs and expenses in connection their good faith
performance of their obligations under the license, provided that Company
shall be given prompt notice thereof. The license may be sooner terminated
upon forty-five (45) days written notice if: (a) the Company breaches a
material term of the agreement; (b) JAE Enterprises Inc. breaches a material
term of the agreement and fails to remedy said breach within thirty (30) days
of its receipt of written notice of the breach; (c) a party becomes insolvent
or files a petition in bankruptcy; (d) the Company discontinues production
and distribution of the products; or (e) Mr. Elway becomes the subject of
public dispute or scandal that materially and adversely affects his image.
The license terminates on December 31, 2000, unless certain sales goals are
met, in which case the license is automatically extended to December 31,
2001.
Celebrity Actor License
- -----------------------
Olympia Dukakis. The Company entered into an exclusive worldwide
license agreement with Olympia Dukakis as of March 1, 1997 to manufacture,
distribute, promote and sell Greek specialty food products bearing her name
and likeness. Under the agreement, the Company has the right to use the
name, photograph, depiction, characterization, likeness, voice, image and
biographical data of Ms. Dukakis and the trademarks, logos, copyrights and
all other authorized material owned or controlled by Ms. Dukakis. The
Company is responsible for all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
-27-
<PAGE>
sales and promotion of the product. Ms. Dukakis is obligated to make
personal appearance and services for television commercials, point of
purchase, promotional, and display materials, print media, outdoor and
transit advertisements, and at sales meetings, press conferences, dinners,
receptions, and similar events at the reasonable request of the Company to
assist in the promotion of the products. The Company reserves all rights in
the products, their formulae and secret ingredients, or their packaging and
labeling. Under the agreement, Ms. Dukakis is entitled to five percent (5%)
of all monies received by the Company as revenue derived from sale of the
products. As additional compensation, the Company has granted Ms. Dukakis
warrants to purchase 100,000 shares of the Company's common stock,
exercisable for five years at $1.00 per share. The agreement can only be
assigned with the prior written consent of the other party, except that the
Company may assign the assignment to a wholly-owned subsidiary or to an
entity owning at least 42.5% of the Company's equity, in which event Ms.
Dukakis has the right to renegotiate the terms of the license. The
agreement provides that the parties shall indemnify the other parties for
actions, claims, suits, losses, judgments, penalties, liabilities, damages,
costs, and expenses arising out of a party's breach of the terms of the
agreement, or through the gross negligence or intentional acts of its
officers, directors, employees, or representatives. The license may be
terminated upon forty-five (45) days written notice if: (a) a party breaches
a material term of the agreement and fails to remedy said breach within
thirty (30) days of its receipt of written notice of the breach; (b) a party
becomes insolvent or files a petition in bankruptcy; (c) the Company
discontinues production and distribution of the products; (d) Ms. Dukakis
becomes the subject of public disrepute or scandal that affects her image; or
(e) Ms. Dukakis dies or suffers any disability impairing her ability to
perform as an entertainer.
(8) Need for any government approval of principal products or services.
------------------------------------------------------------------
The Company does not need government approval for its products and
services, although third party manufacturing facilities are subject to
regulations promulgated by the FDA. The FDA and state regulatory agencies
inspect the facilities of manufacturers on a routine basis for regulatory
compliance. There can be no assurance that the third-party manufacturer can
satisfy these requirements.
(9) Effect of existing or probably governmental regulations on the
business.
--------------------------------------------------------------
The Company engages a third-party manufacturer to produce its products
according to the specifications and product formulas provided by the Company
to such manufacturer. Manufacturing facilities are subject to regulations
promulgated by the FDA. The FDA and state regulatory agencies inspect the
facilities of manufacturers on a routine basis for regulatory compliance.
There can be no assurance that the third-party manufacturer can satisfy these
requirements.
-28-
<PAGE>
There are currently few domestic or foreign laws or regulations that
apply directly to access or commerce on the Internet, but such laws and
regulations are becoming more prevalent. Applicability to the Internet of
existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation, libel, export or
import matters, obscenity and personal privacy is uncertain. The vast
majority of such laws were adopted prior to the advent of the Internet and
related technologies and, as a result, do not contemplate or address the
unique issues of the Internet and related technologies. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel and taxation apply to the Internet. Because of the
Internet's popularity and increasing use, new laws and regulations with
respect to the Internet have been or in the future may be adopted. Such laws
and regulations may cover issues such as: user privacy; pricing; taxation;
content; copyrights; distribution; and characteristics and quality of
products and services. In addition, the growth of the Internet, coupled
with publicity regarding Internet fraud, may lead to the enactment of more
stringent consumer protection laws. The Company could be materially
adversely affected by proposed regulation on voice transmission over the
Internet, encryption technology and access charges for Internet service
providers, as well as the continuing deregulation of the telecommunications
industry. In addition, because the Company's services may be accessible
worldwide, other jurisdictions may claim that the Company is required to
qualify to do business as a foreign corporation in a particular state or
foreign country. These legal uncertainties may impose additional burdens on
the Company's business and increase the cost of potential litigation. The
enactment of any additional laws or regulations may impede the growth of the
Internet, decrease the demand for the Company's products and services,
increase the Company's costs of doing business, decrease the Company's
potential revenues, or in some manner adversely affect the Company's
business, financial condition and results of operations.
The Company may become subject to legal claims relating to the content
in the web site that the Company hosts. The law relating to the liability of
online services companies for information carried on or disseminated through
their services is currently unsettled. It is possible that claims could be
made against online services companies under both United States and foreign
law for defamation, libel, invasion of privacy, negligence, copyright or
trademark infringement, or other theories based on the nature and content of
the materials disseminated electronically and subsequently distributed to
others. Providers of Internet products and services have been sued in the
past (sometimes successfully) based on the content of material. If the
Company has to take costly measures to reduce the Company's exposure to these
risks, or if such measures are required to defend the Company against such
claims, the Company's business, financial condition and results of operations
may be materially and adversely affected. The Company intends to obtain
general liability insurance, however, it may not be adequate to fully
compensate the Company and any costs or imposition of liability that is not
covered by insurance or in excess of insurance coverage could have a material
adverse effect on the Company's business, financial condition and results of
operations.
-29-
<PAGE>
(10) Research and Development Activities.
-----------------------------------
The Company does not engage in material research and development
activities, although the Company conducts basic development and test
marketing in the formulation of its food products
(11) Costs and effects of compliance with environmental laws.
-------------------------------------------------------
Not applicable.
(12) Employees
---------
The Company currently has three full-time employees, including two
management level employee. From time to time, the Company also utilizes the
services of various consultants for specific marketing related purposes. The
Company also utilizes a network of food brokers who work on a commission basis.
The Company expects to hire additional employees as the Company finds it is
necessary. The Company may find it necessary to periodically hire part-time
clerical and administrative help on an as-needed basis.
(c) Reports to Security Holders.
---------------------------
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports to its security holders. To the extent that the
Company is required to deliver annual reports to security holders through its
status as a reporting company, the Company shall deliver annual reports.
Also, to the extent that the Company is required to deliver annual reports by
the rules or regulations of any exchange upon which the Company's shares are
traded, the Company shall deliver annual reports. If the Company is not
required to deliver annual reports, the Company does not intend to undertake
the expenses of producing and delivering such reports. If the Company is
required to deliver annual reports, such reports will contain audited
financial statements as are required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company
becomes a reporting company, management anticipates that Forms 3, 4, 5, 10K-
SB, 10Q-SB, 8-K and Schedules 13D along with appropriate proxy materials will
have to be filed as they come due. If the Company issues additional shares,
the Company may file additional registration statements for those shares.
-30-
<PAGE>
The public may read and copy any materials that the Company files with
the Securities and Exchange Commission at the Commission's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. The Commission maintains an Internet site
at http://www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the Commission.
(d) Year 2000 Disclosure
--------------------
The Company has conducted a review of the Company's programs and has
reason to believe that there are no significant Year 2000 issues within the
Company's internal systems or services. The Company believes that the
Company's systems are Year 2000 compliant. At this time, the Company does
not anticipate any significant expense in ensuring that the Company is Year
2000 compliant. The Company presently does not have a contingency plan
related to Year 2000 issues and does not believe that a contingency plan is
necessary, although the Company may create one upon further assessment. The
Company utilizes and relies upon the services of third parties to conduct its
operations. The Company has not completed an investigation of Year 2000
issues that may affect the operations of third parties upon whom the Company
relies upon. The failure of third parties' software applications or internal
systems, none of which the Company controls, to be Year 2000 compliant upon
January 1, 2000 could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company expects
to complete its investigation of Year 2000 issues, including Year 2000 issues
involving third parties, by November 30, 1999. Until the Company completes a
thorough evaluation of the Company's Year 2000 issues, the Company is
uncertain of the risks and the costs related to addressing such issues.
The Company believes that Year 2000 issues would not materially impact
its business operations as presently conducted. The Company believes a
reasonable worst case Year 2000 scenario for the Company's internal
operations would by that the Company may need to purchase new software
programs for word processing and accounting, which costs are not expected to
exceed $500. The Company also envisions that there could be glitches in the
Company's web site, which is operated by a third party, and that the
insignificant number of sales orders that currently take place through the
Company's web site will not be transacted properly. Although the Company is
uncertain of the effects that Year 2000 issues may have on the Company's
operations, the Company envisions that a reasonable worst case scenario for
third party operations would be the inability to print and send purchase
orders by electronic means, in which event, purchase orders can be
transmitted by telephone.
-31-
<PAGE>
- -----------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -----------------------------------------------------------------------------
The Company is voluntarily filing its registration statement on Form
10-SB in order to make information concerning itself more readily available
to the public.
"FORWARD-LOOKING" INFORMATION
- -----------------------------
This report on Form 10-SB contains certain "forward-looking statements",
which represent the Company's expectations and beliefs, including, but not
limited to statements concerning the Company's expected growth. The words
"believe," "expect," "anticipate," "estimate," "project," and similar
expressions identify forward-looking statements, which speak only as of the
date such statement was made. These statements by their nature involve
substantial risks and uncertainties, certain of which are beyond the Company's
control, and actual results may differ materially depending on a variety of
important factors, including the Company's ability to sign new celebrities,
obtain additional capital, and customer acceptance of the Company's products.
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION
AND THE COMPANY'S RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH
THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN
THIS REPORT.
MANAGEMENT'S DISCSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
The Company did not engage in any substantive business activity from
approximately April 6, 1996 to May 28, 1998. On May 28, 1998, the Company
acquired Famous Fixins, Inc., a privately-held New York corporation formed on
November 29, 1995 ("FFNY") in a transaction viewed as a reverse acquisition.
FFNY was a promoter and marketer of celebrity endorsed food products, which
commenced business activities in 1995 and began sales operations in March
25, 1997. Pursuant to the reorganization, certain FFNY shareholders became
the controlling shareholders of the Company, all of the officers and
directors of the Company resigned and elected the nominees of the FFNY
shareholders in their places, and FFNY became a majority-owned subsidiary of
the Company. The following discussion describes the historical operations of
FFNY, giving effect to its reorganization with the Company in May 1998.
The Company experienced losses in 1997 and 1998, its first two years of
operations, primarily due to start-up costs, slowly developed marketing and
distribution operations and the lack of sufficient licenses from celebrities
-32-
<PAGE>
for the use of their names and reputations in promoting food products.
Further, the Company was hampered by an insufficient amount of credit and
financing. The Company's sales were lower in 1998 than in 1997. The Company
moved its emphasis to celebrity athletes in 1999, and the Company has been able
to obtain a number of valuable licenses pursuant to which it has produced
dramatic growth in its revenues, and it has improved its ability to obtain
credit and financing.
The following table sets forth, for the period indicated, the
relationship between total sales and certain expenses and earnings items:
<TABLE>
Year Ended December 31 Six Months Ended June
1998 1997 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 276,006 $ 358,791 $ 1,197,186 $ 191,569
Cost of products sold $ 193,143 $ 194,701 $ 688,817 $ 117,827
Gross Profit $ 82,863 $ 164,090 $ 508,369 $ 73,742
Operating Expenses $ 748,184 $ 374,822 $ 635,382 $ 392,235
Other income $ 35,347 $ -- $ -- $ 15,000
Loss before provision $ (629,974) $ (210,732) $ (127,013) $ (303,493)
for income taxes
Provision for income taxes $ 669 $ 950 $ 1,334 $ 625
Net Loss $ (630,643) $ (211,682) $ (128,347) $ (304,118)
</TABLE>
The Company's initial year of operations, ended December 31, 1997,
resulted in limited sales of its initial line of celebrity endorsed food
products, yielding a loss that year of $211,682 on revenues of $358,791, for
the reasons discussed above as to the start-up costs, lack of sufficient
capital, and limited line of products.
The Company's operating revenues for the year ended December 31,
1998 were $276,006, a decrease of 23.1% as compared to 1997. This decrease
primarily resulted from the lack of sufficient capital to market the
Company's products. Operating expenses increased by 99.6% over the
same period, primarily due to increased administrative and selling expenses.
-33-
<PAGE>
Operating revenue for the first six months of 1999 were $1,197,186, an
increase of 525% as compared to the first six months of 1998. This increase
resulted from an increase in the number of celebrity athletes who granted
licenses to the Company in that period, and the launch of two new products.
Operating expenses and cost of products sold increased by 160% over the same
period, primarily due to expansion of the Company's operations and costs of
product manufactured. The Company operated profitably in July and August 1999.
The revenues for the first six months of 1999 did not include sales of
products of most of the Company's celebrity athletes, whose products are
only now becoming available for sale. The Company anticipates continued
significant increases in revenues and profitability for the reminder of 1999.
This trend of increased revenues and increased profitability is expected to
continue now that the Company has already launched nine new products for nine
new celebrity athletes this year, and expects to launch four to six more
new products for four to six more new celebrity athletes through the
balance of this year. While the addition of new product lines may also create
liquidity issues and demands on the Company's limited resources, it is
anticipated that the increased revenues generated this year by the new
products will have a favorable impact on income and liquidity.
The Company's food sales business is not seasonal in nature. Inflation
is not deemed to be a factor in the Company's operations.
Financial Condition or Liquidity and Capital Resources.
To date, the Company has funded its operations through a line of
credit, bank borrowings, and borrowings from, and issuances of warrants and
sales of securities to, stockholders as described in Notes 1, 3, 4 and 7 of
the Notes to the 1998 Financial Statements, and from operating revenues.
The Company's inability to obtain sufficient credit and capital financing
has limited operations and growth from inception.
The Company believes that its future growth is dependent on the degree
of success of current operations in generating revenues, and borrowings under
its current credit facility, and the ability to obtain additional credit
facilities, although there can be no assurance that the Company will be able
to obtain any additional financing the Company may require. The Company
believes that such sources of funds will be sufficient to fund its
operations for the next twelve months.
-34-
<PAGE>
- -----------------------------------------------------------------------------
ITEM. 3. DESCRIPTION OF PROPERTY
- -----------------------------------------------------------------------------
The Company maintains its executive offices in approximately 500 square
feet at New York, New York, pursuant to a lease expiring on April 30, 2001,
at an annual rent of approximately $14,400, subject to annual increases.
Although the Company believes that its facilities are adequate for its
existing operations, the Company regularly evaluates the adequacy of these
facilities in light of its growth and expansion plans. The Company may seek
corporate executive office of 2,000 square feet to accommodate expanded
service facilities. The Company may not find suitable facilities at
reasonable rates.
- -----------------------------------------------------------------------------
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -----------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
The following table sets forth, as of October 15, 1999, the number of
shares of the Company's common stock held by each person who is known to
management to be the beneficial owner of more than five percent (5%) of the
outstanding shares of Common Stock. All persons named in the table have the
sole voting and dispositive power, unless otherwise indicated, with respect
to Common Stock beneficially owned.
<TABLE>
Name and Address(1) Amount and Nature Percent of
of Beneficial Owner of Beneficial Owner Class(2)
- ------------------- ------------------- ----------
<S> <C> <C>
Jason Bauer(3)(4) 2,409,747 (Direct) 22.9%
Peter Zorich(4) 2,409,747 (Direct) 22.9%
</TABLE>
(1) Unless otherwise indicated, the address of each of these persons is
Famous Fixins, Inc., 250 West 57th Street, Suite 2501, New York, New
York 10701.
(2) Based upon 10,515,815 shares of common stock outstanding on October 15
1999.
(3) Excludes options to purchase 1,500,000 shares of common stock granted
under an employment agreement in April 1999, which options vest upon
the achievement of certain corporate milestones. No options have
vested.
(4) Disclaims beneficial ownership of warrants to purchase 100,000 shares
of common stock held by Mr. Zorich's mother, Olympia Dukakis.
-35-
<PAGE>
(b) Security Ownership of Management
--------------------------------
The following table sets forth, as of October 15, 1999, the number of
shares of the Company's common stock beneficially held by each director,
named executive officer, and by all officers and directors as a group. All
persons named in the table have the sole voting and dispositive power, unless
otherwise indicated, with respect to Common Stock beneficially owned.
<TABLE>
Name and Address(1) Amount and Nature Percent of
of Beneficial Owner of Beneficial Owner Class(2)
- ------------------- ------------------- ----------
<S> <C> <C>
Jason Bauer(3) 2,409,747 (Direct) 22.9%
Peter Zorich(4) 2,409,747 (Direct) 22.9%
Michael Simon(5) 327,750 (Direct) 3.1%
Olympia Dukakis(6) 100,000 (Direct) 0.9%
All officers and 5,247,244 49.1%
directors as a group
</TABLE>
(1) Unless otherwise indicated, the address of each of these persons is
Famous Fixins, Inc., 250 West 57th Street, Suite 2501, New York, New
York 10701.
(2) Based upon 10,515,815 shares of common stock outstanding on October 15,
1999, and with respect to each holder of options exercisable within 60
days, the shares represented by such options.
(3) Excludes options to purchase 1,500,000 shares of common stock granted
under an employment agreement in April 1999, which options vest upon
the achievement of certain corporate milestones. No options have
vested.
(4) Disclaims beneficial ownership of warrants to purchase 100,000 shares
of common stock held by Mr. Zorich's mother, Olympia Dukakis.
(5) Became a director and officer on July 8, 1999. Includes 60,000
warrants to purchase the Company's common stock that are presently
exercisable, and excludes 240,000 warrants subject to future vesting.
(6) Resigned as a director on July 6, 1999.
-36-
<PAGE>
(c) Changes in Control.
There is no arrangement which may result in a change in control.
Jason Bauer and Peter Zorich have an agreement to vote their respective
shares for the election of each other as a director of the Company. For the
election of any additional director, each of Bauer and Zorich shall vote his
shares for the election of each other's designee, provided that at least two
directorships shall need to be filled. The agreement also provides that they
will vote for the election of Jason Bauer as President and Chief Executive
Officer and Peter Zorich as Executive Vice President of the Company. They
also agreed not to offer to sell, sell, transfer, assign, hypothecate, pledge
or otherwise dispose of any beneficial interest in their voting shares except
subject to the terms of the voting agreement, unless prior written consent is
obtained from the other party that such shares shall not be subject to the
voting agreement or unless the shares are sold to an independent third party
in an arms'-length transaction for fair market value. The agreement expires
on June 30, 2001, unless earlier terminated by written agreement signed by
both parties. Jason Bauer is the Company's President, Treasurer and Chairman
of the Board of Directors. Peter Zorich is the Company's Vice President,
Secretary and a director. Messrs. Bauer and Zorich are the Company's two
largest shareholders.
- -----------------------------------------------------------------------------
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
- -----------------------------------------------------------------------------
(a) Directors and Executive Officers
--------------------------------
The following persons are the present directors and executive officers
of the Company.
<TABLE>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jason Bauer 29 Chairman of the Board, President and
Treasurer
Peter Zorich 30 Director, Executive Vice President and
Secretary
Michael Simon 30 Executive Vice President and Director
Lisa Bauer 29 Director
</TABLE>
-37-
<PAGE>
Directors are elected annually to serve for one year or until their
successors are elected and qualified, subject to removal by the shareholders
of the Company. The term of office for each officer is for one year, unless
otherwise established by the Board of Directors, and until a successor is
elected at the annual meeting of the Board of Directors and is qualified,
subject to removal by the Board of Directors.
None of the directors are directors of other reporting companies.
Management Profiles
- -------------------
Jason Bauer, President, Treasurer and Chairman of the Board. Jason
Bauer has served as the Company's President, Treasurer and Chairman of the
Board since May 1998. In November 1995, he founded Famous Fixins, Inc., a
New York corporation ("FFNY"), which the Company acquired in May 1998. From
November 1995 to May 1998, he served as President and Chairman of the Board
of FFNY. He worked in the food and beverage industries throughout his entire
career. Before founding FFNY, from October 1994 through December 1996, Mr.
Bauer was Regional Sales Manager for Krinos Foods, and from December 1996
through March 1997, he was National Sales Manager for Paradise Products, a
manufacturer and distributor of foods products in the United States. His
expertise includes new product introduction as well as implementation of
sales and marketing programs. From 1991 through 1994, Mr. Bauer was Sales
Manager for Tri-County Distributors, a beverage wholesaler, where he was
responsible for sales of over 100 beverage products. Mr. Bauer received a
Bachelor of Science degree in marketing and finance from Boston University in
1991. He is the husband of Lisa Bauer.
Peter Zorich, Executive Vice President, Secretary and Director. Peter
Zorich has served as the Company's Executive Vice President, Secretary and
Director since May 1998. He was one of the founders of FFNY, which the
Company acquired in May 1998, having served as Vice President and a Director
of FFNY from 1995 to May 1998. Mr. Zorich has extensive experience in the
television industry as a producer and as a programmer for national news and
entertainment. From 1996 to the present, he has worked for the Fox New
Channel in New York, New York as a producer of the prime time news and the
television talk show "Hannity & Colmes". From 1994 to 1996, he was an
associate producer at the business cable network CNBC, where he produced
segments on business, politics and entertainment. From 1993 to 1994, he was
an associate producer for the Fox Network morning television show "Good Day
New York", where he booked guests for local news segments. Mr. Zorich is the
son of Olympia Dukakis. Mr. Zorich received a Bachelor of Arts degree in
political science from Montclair State University in 1990.
Lisa Bauer, Director. Lisa Bauer has served as a Director of the
Company since May 1998. From 1997 to May 1998, she served as a director of
FFNY. From July 1998 to the present, she has worked at J.P. Morgan & Co. as
a financial planner in its asset management services area. From November
1997 to June 1998, she worked as an investment manager at Circle Advisors, a
-38-
<PAGE>
financial planning and investment advisory firm. From April through November
1997, she worked as an estate planner for Smith Barney, and from February
1996 through March 1997, she worked as a sales assistant for Lehman Brothers.
From June 1993 through January 1996, she worked as a sales assistant at J.P.
Morgan. She is the wife of Jason Bauer, the Company's President and Chairman
of the Board.
Michael Simon, Executive Vice President and Director. Michael Simon
has served as the Company's Executive Vice President and a Director since
July 8, 1999. He served, on an independent contractor basis, as the
Company's Vice President of Publicity, in a non-officer capacity, from May
28, 1998 to July 8, 1999. From 1997 to May 1998, he held the non-officer
title of Vice President of Publicity of FFNY. He has worked in the
entertainment industry for the past eight years. From August 1998 to June
1999, he worked as a publicist with the public relations firm B/W/R located
in New York, New York. While at B/W/R, he worked with celebrity clients such
as Cal Ripken, Jr., Sugar Ray Leonard, Jason Alexander, Chris Rock and
corporate clients D.A.R.E. America and Playboy. From August 1997 to July
1998, he worked as a publicist with the public relations firm Jason Weinberg
and Associates located in New York, New York, where he worked with clients
such as Della Reese, Marlo Tmas, Kirstie Alley and Michael Bergin. From July
1995 through July 1997, Mr. Simon was a Public Relations Manager for Planet
Hollywood International, Inc. where his duties included promoting the Planet
Hollywood restaurants and logo. Mr. Simon has extensive relationships with
national media outlets in radio, television and print, and his primary role
for the Company will be that of publicist. From June 1991 through July 1995,
Mr. Simon was a television talent agent for the Los Angeles based talent
agency, International Creative Management, where he worked with clients such
as Valerie Harper, Garry Marshall, Sugar Ray Leonard, Bob Barker and Tori
Spelling. Mr. Simon received a Bachelor of Arts degree from Hunter College
in 1991.
(c) Family Relationships
--------------------
Family relationships that exist among the Company's present officers
and directors are: Jason Bauer, the Company's President and Chairman of the
Board of Directors, is the spouse of Lisa Bauer, a director of the Company;
and Lisa Bauer, a director of the Company, is the spouse of Jason Bauer, the
Company's President and Chairman of the Board.
(d) Involvement in Certain Legal Proceedings
----------------------------------------
None of the officers and directors of the Company have been involved in
the past five years in any of the following: (1) bankruptcy proceedings;
(2) subject to criminal proceedings or convicted of a criminal act; (3)
subject to any order, judgment or decree entered by any Court for violating
any laws relating to the business, securities or banking activities; or (4)
subject to any order for violation of federal or state securities laws or
commodities laws.
-39-
<PAGE>
- -----------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- -----------------------------------------------------------------------------
Executive Compensation
- ----------------------
The following table sets forth information concerning the annual and
long-term compensation during the Company's last three fiscal years of the
Company's President and other most highly compensated employees and all other
officers and directors of the Company:
<TABLE>
Long Term
Compensation
------------
Annual Compensation Awards
---------------------------------------------- ------------
Name and Other Securities
Principal Annual Underlying All Other
Position Year(1) Salary Bonus Compensation Options/SARS Compensation
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jason Bauer(2) 1998 $ 75,094 $ 0 $ 0 0 $ 0
President and Chairman 1997(5) $ 29,050 $ 0 $ 0 0 $ 0
of the Board 1996 $ 0 $ 0 $ 0 0 $ 0
Peter Zorich(2) 1998 $ 0 $ 0 $ 0 0 $ 0
Executive Vice President, 1997 $ 0 $ 0 $ 0 0 $ 0
Treasurer, Secretary and 1996 $ 0 $ 0 $ 0 0 $ 0
Director
Lisa Bauer(2) 1998 $ 0 $ 0 $ 0 0 $ 0
Director 1997 $ 0 $ 0 $ 0 0 $ 0
1996 $ 0 $ 0 $ 0 0 $ 0
Michael Simon(3) 1998 $ 0 $ 0 $ 0 300,000(6) $ 0
Executive Vice President 1997 $ 0 $ 0 $ 0 0 $ 0
and Director 1996 $ 0 $ 0 $ 0 0 $ 0
Olympia Dukakis(2)(4) 1998 $ 0 $ 0 $ 0 0 $ 0
Director 1997 $ 0 $ 0 $ 0 0 $ 0
1996 $ 0 $ 0 $ 0 0 $ 0
Russell Ortman(5) 1998 $ 0 $ 0 $ 0 0 $ 0
Former President and 1997 $ 0 $ 0 $ 0 0 $ 0
Director 1996 $ 0 $ 0 $ 0 0 $ 0
Leona Jamison(5) 1998 $ 0 $ 0 $ 0 0 $ 0
Former Secretary and 1997 $ 0 $ 0 $ 0 0 $ 0
Director 1996 $ 0 $ 0 $ 0 0 $ 0
____________
</TABLE>
-40-
<PAGE>
(1) The compensation paid in fiscal year 1998 includes the operations of
FFNY prior to May 28, 1998.
(2) Became a director and/or officer of the Company on May 28, 1998.
Excludes options to purchase 1,500,000 shares of common stock granted
in April 1999 under an employment agreement, which options vest upon
the achievement of certain corporate milestones. No options have
vested.
(3) Became a director and officer of the Company on July 8, 1999.
(4) Resigned as a director of the Company on July 6, 1999.
(5) Resigned as officer and director of the Company on May 28, 1998.
(6) On June 2, 1998, the Company issued 300,000 warrants to purchase shares
of the Company's common stock to Michael Simon, who then served as the
Company's Vice President of Marketing and Publicity, in a non-officer
capacity, on an independent contractor basis. The warrants are
exercisable for six years at $1.00 per share, subject to vesting at a
rate of 60,000 per year. Presently, 60,000 warrants are exercisable.
The following table sets forth information concerning options granted
during the 1998 fiscal year to those persons named in the preceding Summary
Compensation Table:
<TABLE>
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
Number of
Securities Percent of total
Underlying options/SARS granted Exercise or
Options/SARs to employees in base price Expiration
Name Granted (#) fiscal year(1) ($/Sh) Date
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jason Bauer(2)(3) 0 0% -- --
Peter Zorich(2) 0 0% -- --
Lisa Bauer(2) 0 0% -- --
Michael Simon(4)(5) 300,000 100% 1.00 Jun-02-04
Olympia Dukakis(2)(6) 0 0% -- --
Russell Ortman(7) 0 0% -- --
Leona Jamison(7) 0 0% -- --
</TABLE>
_________
-41-
<PAGE>
(1) Based on the aggregate total of options and/or warrants granted to
officers, directors, and employees, without including any options
and/or warrants granted pursuant to license or other arrangements.
(2) Became a director and/or officer of the Company on May 28, 1998.
(3) Excludes 5-year options granted under an employment agreement in April
1999 to purchase up to 1,500,000 shares of the Company's common stock,
proportioned to vest only after the Company's achievement of certain
corporate milestones, exercisable at $.30 per share. Options to
purchase 600,000 shares at $.30 per share shall vest following the
first fiscal year end in which the Company obtains four or more new
celebrity, Company, entity or athlete licenses similar in stature and
structure to the eight licenses the Company presently has (the
"Licenses") or in which the Company's EBITDA exceeds $300,000;
additional options to purchase 300,000 additional shares at $.30 per
share shall vest following the first fiscal year end in which the
Company obtains a further three new Licenses or more or in which the
Company's EBITDA exceeds $500,000; additional options to purchase
300,000 additional shares at $.30 per share shall vest following the
first fiscal year end in which the Company obtains a further three new
Licenses or more or in which the Company's EBITDA exceeds $700,000; and
additional options to purchase 300,000 additional shares at $.30 per
share shall vest following the first fiscal year end in which the
Company obtains a further three new Licenses or more or in which the
Company's EBITDA exceeds $1,000,000. These options are cumulative and
are subject to anti-dilution rights. If any milestones are achieved in
the same year, all such options shall vest at the time such milestone
is achieved. No options have vested.
(4) Became a director and officer of the Company on July 8, 1999.
(5) On June 2, 1998, the Company issued 300,000 warrants to purchase shares
of the Company's common stock to Michael Simon, an independent
contractor holding the title of Vice President of Publicity in a non-
officer capacity. The warrants are exercisable for six years at $1.00
per share, subject to vesting at a rate of 60,000 per year.
Presently, 60,000 warrants are exercisable.
(6) Resigned as a director of the Company on July 6, 1999.
(7) Resigned on May 28, 1998, pursuant to the reverse acquisition of FFNY.
None of the options held by those individuals listed in the Summary
Compensation Table were exercised in fiscal year 1998. The following table
sets forth information concerning the value of unexercised stock options as
of December 31, 1998 for those individuals named in the Summary Compensation
Table.
-42-
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of securities
Shares underlying unexercised Value of unexercised
Acquired Value Options/SARs in-the-money options/SARs
on realized at FY-end (#) at FY-end ($)(a)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jason Bauer(b) -- -- -- -- -- --
Peter Zorich -- -- -- -- -- --
Lisa Bauer -- -- -- -- -- --
Michael Simon -- -- -- 300,000(c) -- --
Olympia Dukakis -- -- -- -- -- --
Russell Ortman -- -- -- -- -- --
Leona Jamison -- -- -- -- -- --
</TABLE>
(a) The dollar values were calculated by determining the difference between
the fair market value at fiscal year-end of the Common Stock underlying
the warrants and the exercise price of the warrants. The last sale
price of a share of the Company's Common Stock on December 31, 1998 as
reported by OTC Bulletin Board was $0.25.
(b) Excludes options to purchase 1,500,000 shares of common stock,
exercisable at $.30 per share, granted in April 1999 under an
employment agreement, which options vest upon the achievement of
certain corporate milestones. No options have vested.
(c) Warrants to purchase 60,000 shares of the Company's common stock became
exercisable on June 2, 1999 at $1.00 per share.
Director Compensation
- ---------------------
The Company has never compensated members of the Board of Directors for
their services, and has never reimbursed directors for their reasonable
out-of-pocket expenses incurred in connection with their attendance at board
meetings and for other expenses incurred in their capacity as directors of
the Company. The Company presently does not have a defined compensation
plan for members of its Board of Directors. The Company reserves the right
to compensate members of the Board of Directors for their services on the
Board at reasonable rates, including by issuing stock options, and
Reimbursement of expenses for their attendance at each Board meeting.
-43-
<PAGE>
Employment Agreements with Named Executive Officers
- ---------------------------------------------------
The Company has an employment agreement with Mr. Bauer to serve as
President and Chief Executive Officer for a term of five years ending April
11, 2004. The agreement provides for a current annual salary of $150,000,
with cost-of-living adjustments tied to the Consumer Price Index, or such
greater annual salary as may be established by the Company's Board of
Directors. Commencing in the third year of the employment term, Mr. Bauer's
base annual salary shall be increased, each fiscal quarter, to equal at least
one percent of the Company's earnings before interest, taxes, depreciation
and amortization ("EBITDA") in the most recent fiscal year. Under the
agreement, Mr. Bauer has been granted 5-year options to purchase up to
1,500,000 shares of the Company's common stock, proportioned to vest only
after the Company's achievement of certain corporate milestones, exercisable
at $.30 per share. Options to purchase 600,000 shares at $.30 per share
shall vest following the first fiscal year end in which the Company obtains
four or more new celebrity, Company, entity or athlete licenses similar in
stature and structure to the eight licenses the Company presently has (the
"Licenses") or in which the Company's EBITDA exceeds $300,000; additional
options to purchase 300,000 additional shares at $.30 per share shall vest
following the first fiscal year end in which the Company obtains a further
three new Licenses or more or in which the Company's EBITDA exceeds $500,000;
additional options to purchase 300,000 additional shares at $.30 per share
shall vest following the first fiscal year end in which the Company obtains a
further three new Licenses or more or in which the Company's EBITDA exceeds
$700,000; and additional options to purchase 300,000 additional shares at
$.30 per share shall vest following the first fiscal year end in which the
Company obtains a further three new Licenses or more or in which the
Company's EBITDA exceeds $1,000,000. These options are cumulative and are
subject to anti-dilution rights. If any milestones are achieved in the same
year, all such options shall vest at the time such milestone is achieved.
Mr. Bauer is also entitled to an annual performance bonus equal to up to
fifty percent (50%) of his base salary, or such other amount as the Board of
Directors may determine. Mr. Bauer is also entitled to: death benefits of
$100,000; medical and dental insurance; up to six (6) weeks vacation in each
year fully worked; a fifteen year (15-year) term life insurance policy with a
face amount of benefit of $1,000,000 and a beneficiary as designated by Mr.
Bauer; an automobile for his exclusive use; reimbursement for reasonable
travel and other business related expenses; and other bonuses to be
determined by the Board of Directors. In the event of a "change of control"
of the Company, Mr. Bauer is entitled to receive a golden parachute payment
equal to two hundred and ninety percent (290%) of his "base amount", as
defined in Section 280G(3) of the Internal Revenue Code of 1986, as amended,
and has the right to terminate the agreement. "Change of control" is defined
to be any of the following: (i) a change in the ownership or management of the
Company that would be required to be reported in response to certain
provisions of the Securities Exchange Act of 1934; (ii) an acquisition (other
-44-
<PAGE>
than directly from the Company) by a person or entity (excluding the Company)
of 25% or more of the Company's common stock or the Company's then
outstanding voting securities; (iii) a change in a majority of the current
Board of Directors (the "Incumbent Board") (excluding any persons approved by
a vote of at least a majority of the Incumbent Board other than in connection
with an actual or threatened proxy contest); (iv) consummation of a
reorganization, merger, consolidation or sale of all or substantially all of
the Company's assets (collectively, a "Transaction") other than a Transaction
in which all or substantially all of the shareholders of the Company prior to
such transaction own, in the same proportion, more than 50% of the voting
power of the entity resulting from the Transaction, at least a majority of
the board of directors of the resulting entity were members of the Incumbent
Board, and after which no person (other than the resulting entity and certain
affiliates) beneficially owns 25% or more of the voting power of the
resulting entity, except to the extent such ownership existed prior to the
Transaction; or (v) the approval by the Company's stockholders of a complete
liquidation or dissolution of The Company.
On June 2, 1998, the Company entered into an agreement with Michael
Simon for his services, on an independent contractor basis, to perform
services as the Company's publicist. Under the arrangement, the Company
issued 300,000 warrants to purchase shares of the Company's common stock to
Michael Simon in a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933. At the time of issuance, Michael Simon was the
Company's Vice President of Publicity, in a non-officer capacity. The
warrants granted to Mr. Simon are exercisable for six years at $1.00 per
share, subject to vesting at a rate of 60,000 warrants per year and subject
to other conditions of performance of publicity services valued at $275,982
to be rendered to the Company over a five year period.
On July 8, 1999, Michael Simon became the Company's Executive Vice
President and a director of the Company. Pursuant to an oral agreement for an
at-will employment for a term not to exceed one year, Mr. Simon is to receive
compensation amounting to $50,000 annually, and an amount equal to ten percent
of all royalties paid by the Company during the employment period to celebrity
licensors under license agreements.
The Company currently does not have a retirement, pension or profit
sharing program, but the Board of Directors may recommend one at a later
date.
-45-
<PAGE>
- -----------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -----------------------------------------------------------------------------
(a) Transactions with Officers, Directors and Principals
----------------------------------------------------
The Company has a promissory note agreement with Olympia Dukakis, a
former director of the Company, pursuant to which she agreed to make loans
and extend credit to the Company for up to the sum of $200,000. The
promissory note requires the Company to pay interest only, at a variable
rate, with the unpaid principal balance due and payable on August 31, 1999.
The promissory note was personally guaranteed by two principal shareholders,
officers and directors of the Company, Jason Bauer and Peter Zorich. The
proceeds of the loan were derived from borrowings by the related party under
an arrangement with its bank. The Company paid the loan in full on August
31, 1999.
On May 28, 1998, the Company completed the acquisition of Famous
Fixins, Inc., a privately-held New York corporation formed on November 29,
1995 ("FFNY") in a transaction viewed as a reverse acquisition. Immediately
prior to the acquisition, Jason Bauer was the President, Chairman of the
Board, and a principal of FFNY, and Peter Zorich was the Executive Vice
President, Secretary, a director, and a principal of FFNY. Pursuant to a
Plan and Agreement of Reorganization, the Company issued 5,494,662 shares of
common stock to certain shareholders of FFNY which included the controlling
shareholders of FFNY, Jason Bauer and Peter Zorich, in a transaction deemed
to be exempt under Section 4(2) of the Securities Act of 1933. Pursuant to
the reorganization, Jason Bauer, Peter Zorich, Michael Simon, and certain
non-affiliates of FFNY, exchanged their shares of FFNY for an aggregate of
5,494,662 shares of the Company, on a pro-rata basis. Pursuant to the
acquisition, the officers and directors of the Company resigned and elected
the FFNY nominees in their places, and FFNY become a majority-owned
subsidiary of the Company. Jason Bauer, Peter Zorich, and Michael Simon had
acquired their 95, 95 and 5 common shares, respectively, of FFNY on August
21, 1996 for a total cost of less than $10. On October 29, 1997, FFNY
authorized, and on January 23, 1998, FFNY filed, a Certificate of Amendment
of the Certificate of Incorporation to change and increase the authorized
capital stock of FFNY from 200 common shares, no par value, into 20,000,000
shares of common stock, par value $.001. All the shareholders of FFNY
exchanged their collective 200 common shares with no par value,
proportionately, for a total of 4,000,000 shares of common stock, par value
$.001 per share, of FFNY. Pursuant to the Company's acquisition of FFNY,
Jason Bauer, Peter Zorich, Michael Simon, and certain non-affiliates
exchanged their collective 4,104,328 shares of FFNY (representing
approximately 97% of the outstanding shares of FFNY) for an aggregate of
5,494,662 shares of the Company.
-46-
<PAGE>
On May 28, 1998, Company exchanged all of the 246,828 warrants of FFNY
outstanding for 246,828 warrants of the Company on a one for one basis. As
part of the exchange of warrants, the Company issued to Olympia Dukakis
100,000 warrants to purchase shares of the Company's common stock,
exercisable for five years at $1.00 per share, in exchange for her 100,000
five year warrants to purchase the common stock of FFNY at $1.00 per share
which were granted pursuant to license arrangements. At that time, Olympia
Dukakis was a director of the Company, and previously had been a director of
FFNY. Olympia Dukakis resigned as a director of the Company on July 6, 1999.
On June 2, 1998, the Company issued 300,000 warrants to purchase shares
of the Company's common stock to Michael Simon, an independent contractor, for
publicity services valued at $275,982 to be rendered to the Company over a
five year period, a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933. Michael Simon was the Company's Vice President of
Publicity, in a non-officer capacity, at the time of the issuance. The
warrants are exercisable for six years at $1.00 per share, subject to vesting
at a rate of 60,000 per year and subject to other conditions of performance of
services to the Company.
Jason Bauer and Peter Zorich have an agreement to vote their respective
shares for the election of each other as a director of the Company. For the
election of any additional director, each of Bauer and Zorich shall vote his
shares for the election of each other's designee, provided that at least two
directorships shall need to be filled. The agreement also provides that they
will vote for the election of Jason Bauer as President and Chief Executive
Officer and Peter Zorich as Executive Vice President of the Company. They
also agreed not to offer to sell, sell, transfer, assign, hypothecate, pledge
or otherwise dispose of any beneficial interest in their voting shares except
subject to the terms of the voting agreement, unless prior written consent is
obtained from the other party that such shares shall not be subject to the
voting agreement or unless the shares are sold to an independent third party
in an arms'-length transaction for fair market value. The agreement expires
on June 30, 2001, unless earlier terminated by written agreement signed by
both parties.
On April 12, 1999, the Company granted Jason Bauer, pursuant to an
employment agreement to serve as President and Chief Executive Officer, 5-
year options to purchase up to 1,500,000 shares of the Company's common
stock, proportioned to vest only after the Company's achievement of certain
corporate milestones, exercisable at $.30 per share. These options are
cumulative and are subject to anti-dilution rights. If any milestones are
achieved in the same year, all such options shall vest at the time such
milestone is achieved.
-47-
<PAGE>
(c) Parents of the Company
----------------------
Not applicable.
(d) Transactions with Promoters
---------------------------
Not applicable.
- -----------------------------------------------------------------------------
ITEM 8. DESCRIPTION OF SECURITIES
- -----------------------------------------------------------------------------
(a) Common Stock
------------
The Company's authorized capital stock consists of twenty five million
(25,000,000) shares of Common Stock, par value $.001 per share. As of
October 15, 1999, the Company has 10,515,815 shares of Common Stock issued
and outstanding.
Dividend Policy
- ---------------
The Company has never declared or paid any cash dividends. The Company
currently anticipates that all of its earnings will be retained for the
Company's operations and development of the Company's business. The Company
does not anticipate paying any cash dividends in the foreseeable future. Any
future cash dividends will be at the discretion of the Company's Board of
Directors and will depend upon, among other factors, the Company's future
operations and earnings, capital requirements and surplus, general financial
condition, contractual restrictions, and such other factors as the Board of
Directors may deem relevant.
The holders of the outstanding shares of Common Stock are entitled to
share ratably in all dividends at such times and in such amounts as the Board
of Directors may from time to time determine out of assets legally available.
Upon the liquidation, dissolution, or winding up of the Company, the assets
legally available for distribution to the shareholders will be distributed
equally among the holders of the Common Stock.
Voting Rights
- -------------
The holders of the Common Stock are entitled to cast one vote for each
share held of record on all matters presented to the shareholders, including
the election of the Company's directors and all other matters submitted to
the vote of the shareholders.
-48-
<PAGE>
No Cumulative Voting
- --------------------
The holders of the Common Stock do not have cumulative voting rights,
which means that the holders of more than fifty percent (50%) of the
outstanding shares voting for the election of the Company's directors can
elect all of the directors, and, if that occurs, the holders of the remaining
shares of Common Stock will be unable to elect any of the directors.
Preemption Rights
- -----------------
The Company's certificate of incorporation does not provide that the
holders of the Company's shares have any preemptive right.
Material Rights of Holders of Common Stock
- ------------------------------------------
The annual meeting shall be held on the date fixed, from time to time,
by the directors. A special meeting shall be held on the date fixed by the
directors except when the New York Business Corporation Law confers the right
to fix the date upon shareholders. Annual meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
Special meetings may be called in like manner except when the directors are
required by the New York Business Corporation Law to call a meeting, or except
when the shareholders are entitled by said Law to demand the call of a meeting.
Written notice of all meetings shall be given, stating the place, date,
and hour of the meeting, and, unless it is an annual meeting, indicating that
it is being issued by or at the direction of the person or persons calling
the meeting. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other
business which may properly come before the meeting, and shall (if any other
action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called; and, at any such meeting, only such business may be
transacted which is related to the purpose or purposes set forth in the
notice.
If any action is proposed to be taken which would, if taken, entitle
shareholders to receive payment for their shares, the notice shall include a
statement of that purpose and to that effect and shall be accompanied by a
copy of Section 623 of the New York Business Corporation Law or an outline of
its material terms.
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Notice of a meeting need not be given to any shareholder who submits a
signed waiver of notice before or after the meeting. The attendance of a
shareholder at a meeting without protesting prior to the conclusion of the
meeting the lack of notice of such meeting shall constitute a waiver of
notice by him.
Whenever under the provisions of the New York Business Corporation Law
shareholders are required or permitted to take any action by vote, such
action may be taken without a meeting on written consent, signed by the
holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted, in
accordance with the provisions of Section 615 of the New York Business
Corporation Law.
The number of directors constituting the Board of Directors shall be at
least one, but such number may be fixed from time to time by action of the
shareholders or of the directors, or, if the number is not so fixed, the
number shall be one. The number of directors may be increased or decreased
by action of shareholders or of the directors, provided that any action of
the directors to effect such increase or decrease shall require the vote of a
majority of the entire Board.
No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, of the President, or of a majority of
the directors in office.
Any or all of the directors may be removed for cause or without cause by
the shareholders. One or more of the directors may be removed for cause by
the Board of Directors.
Any action required or permitted to be taken by the Board of Directors
or by any committee thereof may be taken without a meeting if all of the
members of the Board of Directors or of any committee thereof consent in
writing to the adoption of a resolution authorizing the action.
The shareholders entitled to vote in the election of directors or the
directors upon compliance with any statutory requisite may amend or repeal
the By-Laws and may adopt new By-Laws, except that the directors may not
amend or repeal any By-Law or adopt any new By-Law, the statutory control
over which is vested exclusively in the said shareholders or in the
incorporators. By-Laws adopted by the incorporators or directors may be
amended or repealed by the said shareholders.
Restricted shares of common stock may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
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The Company intends to furnish its shareholders with annual reports
containing financial statements for each fiscal year and such other period
reports as it may deem appropriate or as required by law.
Provisions Regarding Change of Control
- --------------------------------------
The Company's Certificate of Incorporation and By-laws do not contain
any provisions that are designed to delay, defer or prevent a change in
control of the Company. The Board of Directors is not presently aware of any
takeover attempts of the Company and is not aware of any agreements that
exist in the event of a change of control. The Board is Directors does not
have any current plans to propose any changes to the charter documents or
corporate structure that would have an anti-takeover purpose or effect.
New York has enacted a business combination statute that is contained
in Section 912 of the New York Business Corporation Law. Section 912
provides, among other things, that any person who acquires twenty percent or
more of a corporation's outstanding voting stock (an "Interested
Shareholder") may not engage in a wide range of "business combinations" with
the corporation for a period of five years of the control acquisition date
unless the transaction was approved by the corporation's board of directors
prior to the control acquisition date. A "business combination" is defined
to include: (i) mergers or consolidations of a corporation with or to an
Interested Shareholder; (ii) certain transactions to or with an Interested
Shareholder of ten percent or more (a) of the aggregate market value of the
corporation's assets, (b) of the aggregate market value of the corporation's
outstanding stock, or (c) of the corporation's earning power or net income;
(iii) certain transactions resulting in the issuance or transfer to the
Interested Stockholder of five percent or more of the market value of the
corporation's outstanding stock; (iv) the adoption of any plan or proposal of
an Interested Shareholder for the liquidation or dissolution of the
corporation; (v) certain transactions resulting in increasing the
proportionate share of the voting stock of the corporation owned by an
Interested Shareholder; or (vi) the receipt by an Interested Shareholder
(except proportionately as a shareholder) of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
These restrictions do not apply under certain circumstances if the
corporation's certificate of incorporation or bylaws contain a provision
expressly electing not to be governed by Section 912. The Company's
certificate of incorporation and By-laws do not contain any provision
electing not to be governed by Section 912. The Board of Directors of the
Company believes that the provisions of Section 912 will help ensure that a
change in control of the Company does not occur without the consent of the
Board of Directors or the stockholders, or both, and will encourage any
person who seeks to acquire control of the Company to do so by a negotiated
transaction.
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(b) Options and Warrants
As of October 15, 1999, the Company has options and warrants to
purchase up to 2,941,828 shares of common stock, exercisable at prices of
$.15 to $2.25, issued and outstanding, of which 1,101,828 options and warrants
are presently exercisable. Each option and each warrant entitles the holder
to purchase one share of common stock. On July 22, 2000, 20,000 warrants
expire. On May 28, 2003, 246,828 warrants expire. On January 1, 2004,
30,000 warrants expire. Between April 2004 and September 2004, 845,000
options and warrants expire. On April 12, 2004, 1,500,000 options (of which
no warrants have vested) expire. On June 2, 2004, 300,000 warrants (of which
60,000 warrants have vested) expire.
The warrant certificates provide that in the event of a registered
public offering of at least three million dollars in securities as calculated
therein, the Company shall use reasonable efforts to file a registration
statement under the Act which shall include the shares underlying the
warrants within ten months of the effective date of the public offering. The
Company shall bear the expenses of such registration, including but not
limited to legal, accounting and printing fees. The warrants are redeemable,
at the discretion of the Company, for $.10 per underlying share, commencing
the day following the thirtieth consecutive business day during which the
Company's common stock has traded at prices in excess of a specified price
per share with weekly volume of such trading being in excess of the total
number of shares represented by the warrant certificate.
Pursuant to contracts, the Company is obligated to register options and
warrants to purchase up to 425,000 shares of common stock, such registration
anticipated to be no later than November 30, 1999 or the Company's next
registration statement.
(c) Shares Eligible for Future Sale
As of October 15, 1999, the Company has outstanding 10,515,815 shares of
Common Stock. Of the total outstanding shares of Common Stock, 5,563,853
shares of Common Stock were restricted securities and 4,951,962 shares of
Common Stock are freely tradable without restriction or further registration
under the Securities Act of 1933 (the "Act").
If the conditions of Rule 144 have been met, beginning as of May 29,
1999, 5,505,662 shares of Common Stock of the Company, including 5,087,244
shares of Common Stock held by the executive officers and directors of the
Company, were eligible for sale under Rule 144, subject to the volume
limitations imposed under Rule 144. Beginning on July 22, 1999 to August 7,
1999, 5,000 additional shares of Common Stock held by and acquired by three
nonaffiliates in exchange for services, related to development of a radio
advertisement, a Company cookbook, and for office supplies valued at $5,975,
rendered to the Company became eligible for sale, including those eligible for
sale under Rule 144.
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In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned "restricted
securities" for at least one year in entitled to sell in "brokers'
transactions" or to market makers, within any three-month period, a number of
those shares that do not exceed the grater of 1% of the shares of Common
Stock then outstanding or the average weekly trading volume of the Common
Stock on any national securities exchange and/or reported through the
automated quotation system of a registered securities association during the
four calendar weeks immediately preceding the filing of the notice required
by Rule 144 or, if no such notice is required during the four calendar weeks
preceding the date of receipt by a broker of the order to execute the
transaction or the date of execution of such transaction directly with a
market maker. Sales under Rule 144 are also subject to other requirements,
including the Company's obligation to file all required periodic reports on a
timely basis.
Restricted shares of Common Stock may be sold pursuant to Rule 144
subject to the limitations described in the preceding paragraph. Restricted
shares of Common Stock held for two years and not then held by affiliates of
the Company or persons who were affiliates at any time within three months
prior thereto, may be sold without regard to the volume limitations or
methods of sale restrictions under Rule 144(k). The foregoing summary of
Rule 144 is not intended to be a complete description thereof.
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PART II
- -----------------------------------------------------------------------------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
- -----------------------------------------------------------------------------
(a) Market Information
------------------
Beginning on September 9, 1998, the Common Stock of the Company was
quoted on the OTC Bulletin Board under the symbol "FIXN". The following
table sets forth for the periods indicated, the high and low closing bid
prices for the Common Stock as reported by the OTC Bulletin Board.
Fiscal Year 1998
Quarter Ended High Low
------------- ------ ------
September 30 $1.75 $1.00
December 31 $1.25 $0.25
Fiscal Year 1999
Quarter Ended High Low
------------- ------ ------
March 31 $1.625 $0.375
June 30 $0.67 $0.350
The foregoing quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions.
(b) Holders
-------
The approximate number of holders of record of the Company's Common
Stock at June 28, 1999 was 84, without including the beneficial owners of
shares of common stock held in street name. However, the Company estimates
that there were approximately 1,252 beneficial holders of the Company's
Common Stock as of that date.
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(c) Dividends
---------
No cash dividends have been declared by the Company. The Company
currently anticipates that all of its earnings will be retained for
development of the Company's business, and does not anticipate paying any
cash dividends in the foreseeable future. Future cash dividends, if any,
will be at the discretion of the Company's Board of Directors and will depend
upon, among other things, the Company's future operations and earnings,
capital requirements and surplus, general financial condition, contractual
restrictions, and such other factors as the Board of Directors may deem
relevant.
- -----------------------------------------------------------------------------
ITEM 2. LEGAL PROCEEDINGS
- -----------------------------------------------------------------------------
The Company is not a party to, and none of the Company's property is
subject to, any pending or threatened legal or governmental proceedings that
will have a materially adverse affect upon the Company's financial condition
or operation.
- -----------------------------------------------------------------------------
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- -----------------------------------------------------------------------------
The Company did not have an independent certified accountant from April
30, 1996 to May 28, 1998, during which time period the Company had no
material operations. On May 28, 1998, the Company acquired Famous Fixins,
Inc. ("FFNY"), and the Board of Directors approved the election to retain the
services of FFNY's independent certified accountants, Freeman and Davis LLP,
who have served as FFNY's sole principal accountants since May 25, 1997. The
principal accountant's report on the financial statements does not contain an
adverse opinion or disclaimer of opinion, or was modified as to uncertainty,
audit scope, or accounting principles.
- -----------------------------------------------------------------------------
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- -----------------------------------------------------------------------------
On May 28, 1998, the Company completed the acquisition Famous Fixins,
Inc., a privately-held New York corporation formed on November 29, 1995
("FFNY"). Pursuant to a Plan and Agreement of Reorganization, the Company
issued 5,494,662 shares of common stock to certain shareholders of FFNY which
included the controlling shareholders of FFNY, Jason Bauer and Peter Zorich,
in a transaction deemed to be exempt under Section 4(2) of the Securities Act
of 1933. Pursuant to the reorganization, Jason Bauer, Peter Zorich, and
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certain non-affiliates exchanged their collective shares of FFNY, on a
pro-rata basis, for 2,409,747, 2,409,747, and 674,968 unregistered and
restricted shares of the Company, respectively.
On May 28, 1998, the Company issued 246,828 warrants exercisable for
five years to purchase shares
of the Company's common stock to all of the holders of warrants of FFNY in
exchange for their aggregate of 246,828 warrants to purchase the common stock
of FFNY in a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933. Dan Brecher has 69,552 warrants at $.90 per share.
Fischbein Badillo Wagner Harding has 34,776 warrants at $.90 per share. Erik
Estrada has 35,000 warrants exercisable at $.90 per share. Olympia Dukakis
has 100,000 warrants at $1.00 per share. Diana Goldstein has 7,500 warrants
at $1.00.
On May 28, 1998, the Company issued 11,000 shares of unregistered and
restricted common stock to Weinstein Otterman in exchange for services, valued
at $11,000, rendered to the Company, in connection with a newspaper
advertising design, in a transaction deemed to be exempt under Section 4(2) of
the Securities Act of 1933.
On June 2, 1998, the Company issued 300,000 warrants to purchase shares
of the Company's common stock to Michael Simon, an independent contractor, for
publicity services valued at $275,982 to be rendered to the Company over a
five year period, a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933. Michael Simon was the Company's Vice President of
Publicity, in a non-officer capacity, at the time of the issuance. The
warrants are exercisable for six years at $1.00 per share, subject to vesting
at a rate of 60,000 per year and subject to other conditions of performance of
services to the Company.
Between June 1998 and July 1998, the Company issued 255,000 shares of
common stock pursuant to a securities offering deemed to be exempt under Rule
504 of Regulation D under the Securities Act of 1933, for a total of
$255,000. The securities offering was conducted by the Company's officers
and directors who were not paid commissions or other forms of remuneration.
No underwriters' fees or commissions were paid in the transactions.
In July 1998, the Company issued 132,711 shares of common stock to the
shareholders of FFNY in exchange for 132,711 shares of common stock of FFNY,
which represented all of the outstanding and issued shares of FFNY not
already held by the Company, pursuant to transactions deemed to be exempt
under Rule 504 of Regulation D under the Securities Act of 1933. The
securities offering was conducted by the Company's officers and directors who
were not paid commissions or other forms of remuneration. No underwriters
fees or commissions were paid in the transactions.
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On July 14, 1998, the Company issued 37,500 shares of common stock to
Marvin Kaplan in exchange for services, related to magazine and radio
advertising valued at $37,500, rendered to the Company in a
transaction deemed to be exempt under Rule 504 of Regulation D under the
Securities Act of 1933.
On July 22, 1998, the Company issued to ATG Limited 87,500 shares of
common stock and 40,000 warrants to purchase the Company's common stock for
services rendered to the Company pursuant to a service agreement for print and
radio advertising valued at $110,057, in a transaction deemed to be exempt
under Section 4(2) of the Securities Act of 1933. The warrants were issued as
follows: 10,000 warrants were exercisable for one year at $1.50 per share and
have expired; 10,000 warrants were exercisable for one year at $1.25 and have
expired; 10,000 warrants are exercisable for two years at $2.00; and 10,000
warrants are exercisable for two years at $2.25 per share.
Between July 1998 and August 1998, the Company issued 5,000 shares of
common stock in exchange for services, related to developing a cookbook,
developing a radio commercial and for office supplies, valued at $5,975,
rendered to the Company in a transaction deemed to be exempt under Section
4(2) of the Securities Act of 1933.
On October 8, 1998, the Company issued 20,000 warrants to purchase
shares of common stock to Brighton Venture Corp., exercisable at $1.00 per
share and expiring on January 1, 2003, in exchange for business development
and consulting services valued $22,377 rendered to the Company in a
transaction deemed to be exempt under Section 4(2) of the Securities Act of
1933.
Between December 1998 and April 1999, the Company sold 3,162,066 shares
of common stock, at prices ranging from $.10 to $.25 per share, pursuant to a
securities offering deemed to be exempt under Rule 504 of Regulation D under
the Securities Act of 1933, for a total of $428,310. No underwriters fees or
commissions were paid in the transactions.
On February 10, 1999, the Company issued to Stockplayer.com 1,000,000
shares of the Company's common stock as consideration pursuant to service
agreement for promotional services of the Company's business operations valued
at $100,000 in a transaction deemed to be exempt under Rule 504 of Regulation
D under the Securities Act of 1933.
On April 12, 1999, the Company issued 10,000 warrants to purchase
shares of common stock to Brighton Venture Corp., exercisable at $1.00 per
share and expiring on January 1, 2003, in exchange for business development
and consulting services valued at $3,535 rendered to the Company in a
transaction deemed to be exempt under Section 4(2) of the Securities Act of
1933.
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On April 12, 1999, the Company entered into an employment with Mr.
Bauer to serve as President and Chief Executive Officer for a term of five
years ending April 11, 2004. Under the agreement, Mr. Bauer has been granted
five-year options to purchase up to 1,500,000 shares of the Company's common
stock, proportioned to vest only after the Company's achievement of certain
corporate milestones, exercisable at $.30 per share. Options to purchase
600,000 shares at $.30 per share shall vest following the first fiscal year
end in which the Company obtains four or more new celebrity, Company, entity
or athlete licenses similar in stature and structure to the eight licenses
the Company presently has (the "Licenses") or in which the Company's EBITDA
exceeds $300,000; additional options to purchase 300,000 additional shares at
$.30 per share shall vest following the first fiscal year end in which the
Company obtains a further three new Licenses or more or in which the
Company's EBITDA exceeds $500,000; additional options to purchase 300,000
additional shares at $.30 per share shall vest following the first fiscal
year end in which the Company obtains a further three new Licenses or more or
in which the Company's EBITDA exceeds $700,000; and additional options to
purchase 300,000 additional shares at $.30 per share shall vest following the
first fiscal year end in which the Company obtains a further three new
Licenses or more or in which the Company's EBITDA exceeds $1,000,000. These
options are cumulative and are subject to anti-dilution rights. If any
milestones are achieved in the same year, all such options shall vest at the
time such milestone is achieved.
Between April 1, 1999 and September 21, 1999, the Company issued to the
Tufton Group, Samma Sosa, Alex Rodriguez, Ken Caminiti, Craig Biggio, Jeff
Bagwell, Killer Bee, Inc. and a designated charity, Derek Jeter, Jake
Plummer, Peyton Manning, Alonzo Mourning, Tim Duncan, JAE Endorsements Inc.
and Jeff Sperbeck, pursuant to license agreements, an aggregate of 665,000
warrants and options to purchase the Company's common stock, exercisable for
five years from date of issue at prices of $.15 to $.50 per share, in
transactions deemed to be exempt under Section 4(2) of the Securities Act of
1933.
On April 22, 1999, the Company issued to Albert Ferreira for photography
services rendered to the Company valued at $3,434, 10,000 warrants to
purchase the Company's common stock exercisable for five years at $.40 per
share in a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933.
On April 22, 1999, the Company issued to Michael Lewittes for publicity
services rendered to the Company valued at $3,434, 10,000 warrants to
purchase the Company's common stock exercisable for five years at $.40 per
share in a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933.
On April 22, 1999, the Company issued to Robert Zarem for publicity
services rendered to the Company valued at $3,434, 10,000 warrants to
purchase the Company's common stock exercisable for five years at $.40 per
share in a transaction deemed to be exempt under Section 4(2) of the
Securities Act of 1933.
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On September 9, 1999, the Company entered into an agreement with First
Atlanta Securities, LLC for financial consulting services. Under the
agreement, First Atlanta Securities, LLC received 53,191 shares of common
stock and warrants to purchase 100,000 shares of common stock which have
piggyback registration rights in a transaction deemed to be exempt under
Section 4(2) of the Securities Act of 1933. The warrants may be exercised at
any time after the first date after which the bid price per one share of common
stock exceeds $1.00 per share, and expire on September 9, 2004.
As of October 15, 1999, 10,515,815 shares of the Company's common stock
were issued and outstanding, and options and warrants to purchase up to
2,941,828 shares of common stock were issued and outstanding, of which
1,101,828 options and warrants are presently exercisable.
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- -----------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- -----------------------------------------------------------------------------
The Company's Certificate of Incorporation provides: the Company
shall, to the fullest extent permitted by Article 7 of the Business
Corporation Law, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said Article from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said Article, and the indemnification provided
for herein shall not be deemed exclusive of any other rights to which any
person may be entitled under any By-Law, resolution of shareholders,
resolution of directors, agreement, or otherwise, as permitted by said
Article, as to action in any capacity in which he served at the request of
the corporation.
Article 7 of the Business Corporation Law provides the following:
Section 721. Nonexclusivity of statutory provisions for
indemnification of directors and officers. The indemnification and
advancement of expenses granted pursuant to, or provided by, this article
shall not be deemed exclusive of any other rights to which a director or
officer seeking indemnification or advancement of expenses may be entitled,
whether contained in the certificate of incorporation or the by-laws or, when
authorized by such certificate of incorporation or by-laws, (i) a resolution
of shareholders, (ii) a resolution of directors, or (iii) an agreement
providing for such indemnification, provided that no indemnification may be
made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that
he personally gained in fact a financial profit or other advantage to which
he was not legally entitled. Nothing contained in this article shall affect
any rights to indemnification to which corporate personnel other than
directors and officers may be entitled by contract or otherwise under law.
Section 722. Authorization for indemnification of directors and
officers.
(a) A corporation may indemnify any person made, or threatened
to be made, a party to an action or proceeding (other than one by or in the
right of the corporation to procure a judgment in its favor), whether civil
or criminal, including an action by or in the right of any other corporation
of any type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, which any director or
officer of the corporation served in any capacity at the request of the
corporation, by reason of the fact that he, his testator or intestate, was a
director or officer of the corporation, or served such other corporation,
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partnership, joint venture, trust, employee benefit plan or other enterprise
in any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein, if
such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no reasonable cause
to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contenders, or its equivalent, shall not in itself create a presumption that
any such director or officer did not act, in good faith, for a purpose which
he reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interest of the corporation or
that he had reasonable cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or
threatened to be made, a party to an action by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of any other corporation of any type or kind, domestic or
foreign, of any partnership, joint venture, trust, employee benefit plan or
other enterprise, against amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in connection
with an appeal therein, if such director or officer acted, in good faith, for
a purpose which he reasonably believed to be in, or, in the case of service
for any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best interests of the
corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is
settled or otherwise disposed of, or (2) any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action was brought,
or, if no action was brought, any court of competent jurisdiction, determines
upon application that, in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity for such portion of the
settlement amount and expenses as the court deems proper.
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(d) For the purpose of this section, a corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a person
with respect to an employee benefit plan pursuant to applicable law shall be
considered fines; and action taken or omitted by a person with respect to an
employee benefit plan in the performance of such person's duties for a
purpose reasonably believed, by such person to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the corporation.
Section 723. Payment of indemnification other than by court
award.
(a) A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or proceeding of the
character described in section 722 shall be entitled to indemnification as
authorized in such section.
(b) Except as provided in paragraph (a), any indemnification
under section 722 or otherwise permitted by section 721, unless ordered by a
court under section 724 (Indemnification of directors and officers by a
court), shall be made by the corporation, only if authorized in the specific
case:
(1) By the board acting by a quorum consisting of
directors who are not parties to such action or proceeding upon a finding
that the director or officer has met the standard of conduct set forth in
section 722 or established pursuant to section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable
or, even if obtainable, a quorum of disinterested directors so directs;
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is proper in the circumstances
because the applicable standard of conduct set forth in such sections has
been met by such director or officer, or
(B) By the shareholders upon a finding that the
director or officer has met the applicable standard of conduct set forth in
such sections.
(C) Expenses incurred in defending a civil or criminal
action or proceeding may be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount as, and to the
extent, required by paragraph (a) of section 725.
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Section 724. Indemnification of directors and officers by a
court.
(a) Notwithstanding the failure of a corporation to provide
indemnification, and despite and contrary resolution of the board or of the
shareholders in the specific case under section 723 (Payment of
indemnification other than by court award), indemnification shall be awarded
by a court to the extent authorized under section for indemnification of
directors and officers), 722 (Authorization for indemnification of directors
and officers) and paragraph (a) of section 723. Application therefor may be
made, in every case, either:
(1) In the civil action or proceeding in which the
expenses were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in
which case the application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief in the
action or proceeding in which the expenses were incurred or other amounts
were paid.
(b) The application shall be made in such manner and form as
may be required by the applicable rules of court or, in the absence thereof,
by direction of a court to which it is made. Such application shall be upon
notice to the corporation. The court may also direct that notice be given at
the expense of the corporation to the shareholders and such other persons as
it may designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the
court may allow a person such reasonable expenses, including attorneys' fees,
during the pendency of the litigation as are necessary in connection with his
defense therein, if the court shall find that the defendant has by his
pleadings or during the course of the litigation raised genuine issues of
fact or law.
Section 725. Other provisions affecting indemnification of
directors and officers.
(a) All expenses incurred in defending a civil or criminal
action or proceeding which are advanced by the corporation under paragraph
(c) of section 723 (Payment of indemnification other than by court award) or
allowed by a court under paragraph (c) of section 724 (Indemnification of
directors and officers by a court) shall be repaid in case the person
receiving such advancement or allowance is ultimately found, under the
procedure set forth in this article, not to be entitled to indemnification
or, where indemnification is granted, to the extent the expenses so advanced
by the corporation or allowed by the court exceed the indemnification to
which he is entitled.
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<PAGE>
(b) No indemnification, advancement or allowance shall be
made under this article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with
the law of the jurisdiction of incorporation of a foreign corporation which
prohibits or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a by-law, a resolution of the
board or of the shareholders, an agreement or other proper corporate action,
in effect at the time of the accrual of the alleged cause of action asserted
in the threatened or pending action or proceeding in which the expenses were
incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or
(3) If there has been a settlement approved by the court,
that the indemnification would be inconsistent with any condition with
respect to indemnification expressly imposed by the court in approving the
settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders,
the corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such
payment, and, in any event, within fifteen months from the date of such
payment, mail to its shareholders of record at the time entitled to vote for
the election of directors a statement specifying the persons paid, the
amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
(d) If any action with respect to indemnification of
directors and officers is taken by way of amendment of the by-laws,
resolution of directors, or by agreement, then the corporation shall, not
later than the next annual meeting of shareholders, unless such meeting is
held within three months from the date of such action, and, in any event,
within fifteen months from the date of such action, mail to its shareholders
of record at the time entitled to vote for the election of directors a
statement specifying the action taken.
(e) Any notification required to be made pursuant to the
foregoing paragraph (c) or (d) of this section by any domestic mutual insurer
shall be satisfied by compliance with the corresponding provisions of section
one thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to
indemnification of directors and officers and insurance therefor shall apply
to domestic corporations and foreign corporations doing business in this
state, except as provided in section 1320 (Exemption from certain
provisions).
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<PAGE>
Section 726. Insurance for indemnification of directors and
officers.
(a) Subject to paragraph (b), a corporation shall have power
to purchase and maintain insurance:
(1) To indemnify the corporation for any obligation which
it incurs as a result of the indemnification of directors and officers under
the provisions of this article, and
(2) To indemnify directors and officers in instances in
which they may be indemnified by the corporation under the provisions of this
article, and
(3) To indemnify directors and officers in instances in
which they may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance covering such
directors and officers provides, in a manner acceptable to the superintendent
of insurance, for a retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any
payment, other than cost of defense, to or on behalf of any director or
officer:
(1) if a judgment or other final adjudication adverse to
the insured director or officer establishes that his acts of active and
deliberate dishonesty were material to the cause of action so adjudicated, or
that he personally gained in fact a financial profit or other advantage to
which he was not legally entitled, or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a)
may be included in a single contract or supplement thereto. Retrospective
rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons
provided in paragraph (c) of section 725 (Other provisions affecting
indemnification of directors or officers), mail a statement in respect of any
insurance it has purchased or renewed under this respesection, specifying the
insurance carrier, date of the contract, cost of the insurance, corporate
positions insured, and a statement explaining all sums, not previously
reported in a statement to shareholders, paid under any indemnification
insurance contract.
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<PAGE>
(e) This section is the public policy of this state to spread
the risk of corporate management, notwithstanding any other general or
special law of this state or of any other jurisdiction including the federal
government.
The Company's Certificate of Incorporation further provides: personal
liability of the directors of the Company is eliminated to the fullest extent
permitted by the provisions of paragraph (b) of Section 402 of the Business
Corporation Law, as the same may be amended and supplemented.
Section 402(b) of the Business Corporation Law provides: the
certificate of incorporation may set forth a provision eliminating or
limiting the personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity, provided
that no such provision shall eliminate or limit: (1) the liability of any
director if a judgment or other final adjudication adverse to him establishes
that his acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he personally gained in fact
a financial profit or other advantage to which he was not legally entitled or
that his acts violated section 719, or (2) the liability of any director for
any act or omissions prior to the adoption of a provision authorized by this
paragraph.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company is
aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
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PART F/S
Index to Financial Statements
Financial Statements For Year Ended December 31, 1998
Independent Auditors' Report
Exhibit "A" - Balance Sheets
Exhibit "B" - Statements Of Operations
Exhibit "C" - Statements Of Cash Flows
Exhibit "D" - Statements Of Stockholders' Equity (Deficit)
Notes to Financial Statements
Interim Financial Statements For Six Month Period
Ended June 30, 1999 (Unaudited)
Interim Balance Sheet (Unaudited)
Interim Statement of Operations (Unaudited)
Interim Statement of Cash Flows (Unaudited)
Interim Statement of Stockholders' Equity (Unaudited)
Notes to Interim Financial Statements
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<PAGE>
FAMOUS FIXINS, INC.
FINANCIAL STATEMENTS
TABLE OF CONTENTS
-----------------
PAGE
----
FINANCIAL STATEMENTS:
INDEPENDENT AUDITORS' REPORT 1
EXHIBIT "A" - BALANCE SHEETS 2
EXHIBIT "B" - STATEMENTS OF OPERATIONS 3
EXHIBIT "C" - STATEMENTS OF CASH FLOWS 4
EXHIBIT "D" - STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) 5
NOTES TO FINANCIAL STATEMENTS 6 - 17
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<PAGE>
[letterhead of
FREEMAN & DAVIS LLP
CERTIFIED PUBLIC ACCOUNTANTS]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders of
Famous Fixins, Inc.:
We have audited the accompanying balance sheets of Famous Fixins, Inc.
as of December 31, 1998 and 1997, and the related statements of operations,
cash flows and stockholders' equity (deficit) for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Famous Fixins,
Inc. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred substantial losses from
operations and has deficiencies in working capital and stockholders' equity,
which raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
New York, New York /s/ Freeman & Davis LLP
July 29, 1999
1
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<PAGE>
FAMOUS FIXINS, INC.
BALANCE SHEETS
<TABLE>
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
A S S E T S
-----------
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 19,500 $ 9,522
Accounts receivable, less allowance for doubtful
accounts of $5,000 in 1997 13,613 13,419
Merchandise inventory 27,420 61,186
Prepaid expenses 50,000 2,227
--------- ---------
TOTAL CURRENT ASSETS 110,533 86,354
--------- ---------
PLANT AND EQUIPMENT
- -------------------
Furniture and fixtures 9,309
Machinery and equipment 9,406 6,304
--------- ---------
18,715 6,304
Less: Accumulated depreciation 3,578 1,261
--------- ---------
NET PLANT AND EQUIPMENT 15,137 5,043
--------- ---------
OTHER ASSETS
- ------------
Security deposits 2,400
Costs incurred in connection with a securities
offering in progress 14,775
--------- ---------
TOTAL OTHER ASSETS 2,400 14,775
--------- ---------
$ 128,070 $ 106,172
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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<PAGE>
EXHIBIT "A"
<TABLE>
DECEMBER 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
- -------------------
Current installments of long-term note payable to bank $ 15,432 $
Note payable to related party 134,303 197,261
Accounts payable and accrued expenses 134,138 129,959
Taxes payable - other than on income 1,643 1,164
Income taxes payable 625 625
Subscribers' deposits on common stock, net 12,500
Due to stockholders 11,154
--------- ---------
TOTAL CURRENT LIABILITIES 298,641 340,163
--------- ---------
LONG-TERM LIABILITY
- -------------------
Long-term note payable to bank, net of current installments 25,253
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
- ------------------------------
Common stock, $.001 par value per share:
Authorized 25,000,000 shares
Issued and outstanding
6,883,891 shares in 1998; 6,105,180 shares in 1997 6,883 6,105
Additional paid-in capital (deficit) 662,937 (5,095)
Accumulated deficit (865,644) (235,001)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (195,824) (233,991)
--------- ---------
$ 128,070 $ 106,172
========= =========
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<PAGE>
EXHIBIT "B"
FAMOUS FIXINS, INC.
STATEMENTS OF OPERATIONS
</TABLE>
<TABLE>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
--------- ---------
AMOUNT AMOUNT
--------- ---------
<S> <C> <C>
NET SALES $ 276,006 $ 358,791
--------- ---------
COST OF GOODS SOLD
- ------------------
Merchandise inventory at beginning of year 61,186
Purchases 154,878 245,388
Other direct costs 4,499 10,499
--------- ---------
220,563 255,887
Less: Merchandise inventory at end of year 27,420 61,186
--------- ---------
TOTAL COST OF GOODS SOLD 193,143 194,701
--------- ---------
GROSS PROFIT ON SALES 82,863 164,090
OTHER INCOME - MANAGEMENT AND
DISTRIBUTION SERVICES 35,347
--------- ---------
TOTAL INCOME 118,210 164,090
--------- ---------
OPERATING EXPENSES
- ------------------
Selling expenses 530,676 305,416
General and administrative expenses 203,482 62,474
Interest expense, net 14,026 6,932
--------- ---------
TOTAL OPERATING EXPENSES 748,184 374,822
--------- ---------
OPERATING LOSS BEFORE PROVISION
FOR INCOME TAXES (629,974) (210,732)
PROVISION FOR INCOME TAXES 669 950
--------- ---------
NET LOSS $(630,643) $(211,682)
========= =========
Net loss per common share, basic $(0.10) $(0.03)
Net loss per common share, assuming full dilution $(0.10) $(0.03)
Weighted average number of common shares
outstanding:
Basic 6,458,266 6,105,180
Assuming full dilution 6,458,266 6,105,180
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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<PAGE>
EXHIBIT "C"
FAMOUS FIXINS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(630,643) $(211,682)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash items:
Depreciation 2,317 1,261
Value of common stock issued for services
received by the Company 138,500
Value of warrants issued for services
received by the Company 176,173
Changes in working capital (9,543) 54,916
Increase in security deposits (2,400)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (325,596) (155,505)
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Payments for plant and equipment additions (8,936) (6,304)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 365,437
Proceeds of long-term debt 50,000
Repayments of long-term debt (9,315)
Proceeds (payments) of note payable to related party - net (62,958) 177,708
Increase (decrease) in stockholders' loans (11,154) 7,350
Costs incurred in connection with a securities offering
in progress (13,775)
Subscribers' deposits on common stock, net 12,500
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 344,510 171,283
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,978 9,474
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 9,522 48
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 19,500 $ 9,522
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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<PAGE>
EXHIBIT "D"
FAMOUS FIXINS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
TWO YEARS ENDED DECEMBER 31, 1998
<TABLE>
Additional
Common Stock Paid-In
Capital Accumulated
Total Shares Amount (Deficit) Deficit
--------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE - JANUARY 1, 1997 $ 610,518 $ 611 $ (611) $ -
Retroactive recognition to January 1,
1997 of May 28, 1998 reorganization
whereby 5,494,662 common
shares were issued in exchange
for 4,104,328 common shares of
the New York Subsidiary (22,309) 5,494,662 5,494 (4,484) (23,319)
Net loss for 1997 (211,682) (211,682)
--------- --------- ----- -------- ---------
BALANCE - DECEMBER 31, 1997,
AS ADJUSTED (233,991) 6,105,180 6,105 (5,095) (235,001)
Issuance in June, 1998, of common
shares on a one for one basis for
common shares sold in January
1998 by the New York Subsidiary
in its securities offering 102,265 132,711 133 102,132
Issuance of common shares for
goods and services received 141,975 141,000 140 141,835
Issuance of common shares in a
securities offering in July, 1998 - net 211,953 255,000 255 211,698
Issuance of common shares in a
securities offering in December
1998 - net 36,444 250,000 250 36,194
Issuance of warrants for services
rendered 176,173 176,173
Net loss for 1998 (630,643) (630,643)
--------- --------- ------ -------- ---------
BALANCE - DECEMBER 31, 1998 $(195,824) 6,883,891 $6,883 $662,937 $(865,644)
========== ========= ====== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BUSINESS COMBINATION - PRINCIPLES OF PRESENTATION
-------------------------------------------------
The accompanying financial statements include the accounts of
Famous Fixins, Inc. (Company) and reflects certain transactions which are
described below.
Famous Fixins, Inc., a New York corporation (New York
Subsidiary), began its sales operations on March 25, 1997. On May 28, 1998,
Spectrum Resources, Inc., a Nevada corporation (Spectrum) (an inactive
corporation with no assets and liabilities), pursuant to a Plan and Agreement
of Reorganization, issued 5,494,662 shares of common stock in exchange for
substantially all (4,104,328) of the issued and outstanding common shares of
New York Subsidiary. In addition, in June 1998 Spectrum exchanged 132,711
shares of its common stock for 132,711 shares of New York Subsidiary from
shareholders who acquired such shares in a private placement by New York
Subsidiary in January, 1998. As a result, Spectrum, became the parent of New
York Subsidiary.
On June 19, 1998, Famous Fixins Holding Company (Holding) was
incorporated in the State of New York. On November 16, 1998, Spectrum merged
into Holding by exchanging its outstanding common shares for shares of
Holding on a one for one basis.
On November 20, 1998, New York Subsidiary merged into Holding
and Holding changed its name to Famous Fixins, Inc. (Company).
The reorganization transactions have been accounted for as a
"pooling of interests" pursuant to which the recorded assets and liabilities
of the individual companies are carried forward in the financial statements
at their recorded amounts and the income of the Company includes income of
the individual companies from the beginning of the year, January 1, 1998.
All significant intercompany accounts and transactions are eliminated. The
1997 financial statements have been restated to furnish comparative
information with the 1998 presentation.
6
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
BUSINESS ACTIVITIES OF THE COMPANY
----------------------------------
The Company is a promoter and marketer of celebrity endorsed
food products. The Company currently has a line of Olympia Dukakis Greek
salad dressings, which are sold to supermarket chains in the northeast United
States. In addition, the Company also provides management and distribution
services for food products owned by other celebrities. The Company has
launched additional food product lines bearing other celebrity names in 1999.
In August 1998, the Company received approval to trade its
common shares on the "OTC Bulletin Board".
During 1998, the Company received capital of $492,637 in cash
and services (net of costs of $61,278) from securities offerings by issuing
778,711 shares of its common stock. In 1999, through June 30, 1999 the
Company has issued an additional 3,578,733 shares of common stock in exchange
for cash and services aggregating approximately $475,000 which as at June 30,
1999 (a) $294,000 was collected by the Company; (b) $60,000 is receivable
under a stock subscription agreement; and (c) $121,000 has been provided in
various services. The offerings are pursuant to the exemptions from
registration with the Securities and Exchange Commission (SEC) provided by
Section 4(2) of the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, including Regulation D, and under
applicable state laws, rules and regulations.
The accompanying financial statements have been prepared in
conformity with generally accepted principles which contemplates continuation
of the Company as a going concern. The Company has incurred substantial
operating losses since inception of operations and as at December 31, 1998
reflects deficiencies in working capital and stockholders' equity. These
conditions indicate that the Company may be unable to continue as a going
concern. Management believes that it can achieve profitable operations in
the future and that it can raise adequate capital and financing as may be
required. However, there can be no assurance that future capital
contributions and/or financing will be sufficient for the Company to continue
as a going concern or that it can achieve profitable operations in the
future. These financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
7
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
--------------------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
STOCK-BASED COMPENSATION - WARRANTS
-----------------------------------
The Company accounts for stock-based compensation using the
fair-value based method prescribed in SFAS No. 123 "Accounting for Stock-Based
Compensation". Compensation cost for vested stock warrants issued by the
Company is measured at the grant date based on the fair value of the warrant
and is recognized over the service period, which is usually the contract
period. See Note 7.
REVENUE RECOGNITION
--------------------------------------------------
Revenue from sales of celebrity endorsed food products is
recorded at the time the goods are shipped or when title passes, with
appropriate provision for uncollectible accounts.
ACCOUNTING CHANGE
-----------------
In 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income", which established
standards for reporting and display of comprehensive income and its
components in the financial statements. Besides net income, SFAS No. 130
requires the reporting of other comprehensive income, defined as revenues,
expenses, gains and losses that under generally accepted accounting
principles are not included in net income. As at December 31, 1998 and 1997,
the Company had no items of other comprehensive income and as a result, no
additional disclosure is included in the financial statements.
8
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
CONCENTRATIONS OF CREDIT RISK
-----------------------------
Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Statement of Financial
Accounting Standards No. 105, consist of cash and cash equivalents and trade
accounts receivable.
A. CASH AND CASH EQUIVALENTS
-------------------------
The Company maintains its cash balances in one financial
institution located in New York, New York. The balances are insured by the
Federal Deposit Insurance Corporation up to $100,000. As at December 31,
1998, all cash balances are covered by such insurance.
The Company invests excess cash in high quality short-
term liquid money market instruments with maturities of three months or less
when purchased. Investments are made only in instruments issued by or
enhanced by high quality financial institutions. The Company has not
incurred losses related to these investments.
B. ACCOUNTS RECEIVABLE
-------------------
The Company's customer base consists primarily of
supermarkets located in the northeast United States. Credit limits, ongoing
credit evaluations and account monitoring procedures are utilized to minimize
the risk of loss. The Company does not generally require collateral. In
1998, approximately 30% of the sales of the Company are derived from two
customers. Although the Company is directly affected by the well being of
the retail food industry, management does not believe significant credit risk
exists at December 31, 1998.
9
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
MERCHANDISE INVENTORY
---------------------
Merchandise inventory is stated at the lower of cost or market
value on a first-in, first-out basis.
PLANT AND EQUIPMENT
-------------------
Plant and equipment are stated at cost, less accumulated
depreciation. The cost of major improvements and betterments to existing
plant and equipment are capitalized, while maintenance and repairs are
charged to expense when incurred. Upon retirement or other disposal of plant
and equipment, the profit realized or loss sustained on such transaction is
reflected in income. Depreciation is computed on the cost of plant and
equipment on the straight-line method, based upon the estimated 5 year useful
life of the assets.
INCOME TAXES
------------
The Company has incurred net operating losses for federal income
tax purposes during the current and prior tax years. Such losses, in the
approximate amount of $240,000 are available through December 31, 2013 as
deductions from future income otherwise subject to income taxes.
The Company has adopted Statement of Financial Accounting
Standards No. 109, "Accounting For Income Taxes", which requires the
recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
No deferred tax assets are recognized in the balance sheet as at December 31,
1998 in connection with the Company's net operating losses inasmuch as a full
valuation allowance has been established by management.
10
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 2. PREPAID EXPENSES
----------------
As at December 31, 1998, prepaid expenses in the amount of $50,000
consist of unused barter credits received by the Company. These credits are
valued at the estimated cost of the services to be received by the Company
in connection with future spot advertisements.
NOTE 3. NOTE PAYABLE TO RELATED PARTY ($134,303)
----------------------------------------
The Company has entered into a promissory note and agreement with
a related party pursuant to which such party agreed to make loans and extend
credit to the Company up to the sum of $200,000. The promissory note
requires the Company to pay interest only, at a variable rate (currently 10%
per annum), with the unpaid principal balance due and payable on August 1,
1999. The proceeds of the loan were derived from borrowings by the related
party under an arrangement with its bank. The Company and the related party
have informally agreed that the Company will make monthly payments of
principal and interest equal to the amounts due by the related party to its
bank. Repayment of the Company's loan is guaranteed by certain stockholders
of the Company.
The promissory note shall become due on demand if the Company
violates any of the covenants contained in the promissory note agreement. As
at December 31, 1998, the Company is in violation of one such covenant (as
described in Note 1 in connection with going concern matters).
NOTE 4. LONG-TERM NOTE PAYABLE TO BANK
------------------------------
Pursuant to a business revolving credit agreement with The Chase
Manhattan Bank (Bank), the Bank agreed to make loans to the Company up to a
maximum credit line amount (currently $100,000). The Bank notifies the
Company as to the amount of the available credit line from time to time. The
Company may borrow from the Bank incremental principal amounts of at least
$2,500. Borrowings bear interest at the Bank's prime rate plus 1/2%.
Principal is payable in monthly installments equal to 1/36 of the outstanding
principal amount of the loan as of the date of the last loan made prior to
the date of such installment. Repayment of the Company's loan is guaranteed
by certain stockholders of the Company.
The outstanding balance of the long-term note payable to the Bank at
December 31, 1998 is summarized as follows:
Current installments due with one year $15,432
Installments due after one year 25,253
-------
TOTAL LONG-TERM NOTE PAYABLE TO BANK $40,685
=======
11
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 5. ADVERTISING
-----------
The Company expenses all advertising costs as incurred. See Note
2 for details of unused advertising barter credits of $50,000 included in
prepaid expenses at December 31, 1998. Advertising expense was $285,315 and
$39,063 for the years ended December 31, 1998 and 1997, respectively.
NOTE 6. COMMITMENTS AND CONTINGENCIES
-----------------------------
LICENSING AGREEMENT
-------------------
The Company has a celebrity licensing agreement with a related
party which covers the worldwide sale of its current major merchandise
product line. The contract specifies that the Company shall pay license fees
to the issuer based upon collections on merchandise sales of certain
speciality food products. There are no minimum sales or license fee
guarantees. Provisions are included in the agreement for termination by
either party in certain events.
License fees are charged to operations upon sale of the related
food products. Total license fees expense was approximately $11,000 for the
year ended December 31, 1998.
REAL PROPERTY LEASE
-------------------
Rental commitments under a noncancellable operating lease for
the Company's office facilities located in New York, New York are as follows:
YEAR ENDING
DECEMBER 31, AMOUNT
------------ -------
1999 $14,400
2000 14,400
2001 4,800
-------
$33,600
=======
Rent expense charged to operations was approximately $8,000 for
the year ended December 31, 1998.
12
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------
TRANSPORTATION EQUIPMENT LEASE
------------------------------
The Company is obligated under the terms of an operating lease
for transportation equipment utilized by it. Future minimum annual payments
under this noncancellable operating lease are as follows:
YEAR ENDING
DECEMBER 31,
------------
1999 $ 7,342
2000 4,283
-------
TOTAL $11,625
=======
Total equipment lease expense charged to operations for the
year ended December 31, 1998 was approximately $7,300.
YEAR 2000 COMPLIANCE
--------------------
As the year 2000 approaches, the Company recognizes the need to
ensure its operations will not be adversely impacted by Year 2000 software
failures. The Company primarily uses licensed software products in its
operations with a significant portion of processes and transactions
centralized in one particular software package. During 1999, management
plans to upgrade its software so that the Company's accounting system will be
Year 2000 compliant. The cost of the upgrade is not expected to be material.
Also during 1999, attention will be focused on compliance attainment efforts
of vendors and others, including key system interfaces with customers and
suppliers. Although it is not possible to quantify the effects Year 2000
compliance issues will have on customers and suppliers, the Company does not
anticipate related material adverse effects on its financial condition or
results of operations.
OTHER CONTINGENCIES
-------------------
In the normal course of business, the Company has lawsuits,
claims and contingent liabilities. The Company does not expect that any sum
it may have to pay in connection with any of these matters would have a
materially adverse effect on its financial position or results of operations.
13
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 7. COMMON STOCK AND OUTSTANDING WARRANTS
-------------------------------------
The Company has issued warrants to purchase shares of its common
stock to certain officers and nonemployees. The objective of the issuance of
the warrants include attracting and retaining the best talent, providing for
additional performance incentives, and promoting the success of the Company
by providing the opportunity to employees and nonemployees to acquire common
stock. Warrants outstanding have been granted at exercise prices ranging
from $.90 to $2.25 and expire at various dates after the grant date.
The status of the Company's warrants is summarized below as of
December 31:
NUMBER OF OPTION
WARRANTS PRICE
------------ ------------
Outstanding at December 31, 1996 0 $ 0
Granted in 1997 104,328 .90
------------ ------------
Outstanding at December 31, 1997 104,328 .90
Granted in 1998 (*) 502,500 .90 - 2.25
------------ ------------
Outstanding at December 31, 1998 606,828 $.90 - $2.25
============ ============
The Company accounts for stock-based compensation using the fair
value method prescribed in SFAS No. 123 "Accounting for Stock-Based
Compensation", under which compensation cost for vested stock warrants issued
is measured at the grant date based on the fair value of the warrant. Such
cost is recognized over the service period, which is usually the contract
period.
The fair value of each vested warrant issued is estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for the warrants issued: dividend yield of
0%, expected volatility of 150%, risk-free rate of 6%, and expected lives
ranging from 1 to 5 years.
Stock-based compensation cost charged to operations for the year
ended December 31, 1998 was $176,173.
Subsequent to year end, the Company issued additional warrants to
purchase 1,980,000 shares of the Company's common stock (of which 1,500,000
warrants have not vested) at strike prices ranging from $0.15 to $1.00, with
expiration dates through June 30, 2004.
(*) 300,000 warrants are exercisable subject to conditions
of continued employment, at 60,000 warrants per year, cumulatively, over a
five year period, the initial exercise date commencing in June 1999.
14
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 8. NET LOSS PER COMMON SHARE
-------------------------
Basic net loss per common share is calculated by dividing the
net loss by the weighted average number of common shares outstanding.
The calculation of fully diluted net loss per common share
assumes conversion of warrants into common stock. Net loss and shares used
to compute net loss per share, basic and assuming full dilution, are
reconciled below:
1998 1997
---------- ----------
Net loss as reported $(630,643) $(211,682)
========= =========
Net loss, basic $(630,643) $(211,682)
Effect of dilutive securities, warrants
convertible to common stock (*) - -
--------- ---------
Net loss, assuming full dilution $(630,643) $(211,682)
========= =========
Weighted average number of common shares,
basic 6,458,266 6,105,180
Effect of dilutive securities, warrants
convertible to common stock (*) - -
--------- ---------
Common shares, assuming full dilution 6,458,266 6,105,180
========= =========
(*) No effect has been given to the conversion of warrants to
common stock inasmuch as such conversion would be anti-
dilutive.
15
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 7. CASH FLOW DATA
--------------
Cash and cash equivalents include cash on hand and investments
with maturities of three months or less at the time of purchase. Working
capital changes on the statements of cash flows were as follows:
YEAR ENDED
DECEMBER 31,
---------------------
1998 1997
--------- --------
(Increase) decrease in assets:
Accounts receivable - net $ (194) $(13,419)
Merchandise inventory 33,766 (61,186)
Prepaid expenses (47,773) (2,227)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 4,179 129,959
Taxes payable - other than on income 479 1,164
Income taxes payable 625
--------- --------
NET CHANGES IN WORKING CAPITAL $ (9,543) $ 54,916
========= ========
Supplemental information about cash
payments is as follows:
Cash payments for interest $ 9,509 $ 6,110
Cash payments for income taxes $ 625 $ 325
Supplemental disclosure of noncash
financing activities:
Issuance of common stock in exchange for
legal services incurred in connection with
a securities offering in progress $ 1,000
Issuance of common stock in exchange for
plant and equipment acquired $ 3,475
16
-85-
<PAGE>
FAMOUS FIXINS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 10. EVENTS SUBSEQUENT
-----------------
Subsequent to these financial statements the Company entered into
several contracts with celebrity athletes and related entities which provide
for the Company to pay royalties ranging from 2.5% to 12.5% of sales of
endorsed food products plus 25% to 75% of endorsed merchandise products. As
additional compensation in connection with these contracts, the Company
issued 480,000 warrants to purchase shares of its common stock at exercise
prices ranging from $.15 to $1.00 per share, expiring at various dates
through June 30, 2004. Certain of the contracts call for minimum annual
royalty amounts, which aggregate $125,000 in 1999 and $125,000 in 2000.
The Company also entered into an employment agreement with its
chief executive officer which provides for an annual compensation package,
life insurance, death benefits and stock options exercisable by the officer
based on the Company achieving certain targets over a five year period.
Exercise of the options may have a dilutive effect.
NOTE 11. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------------------------
The estimate of the fair value of each class of financial
instruments for which it is practicable to estimate that value is based on
the following methods and assumptions:
CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, NOTE PAYABLE TO
RELATED PARTY, ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
The carrying amounts of these items are assumed to be a
reasonable estimate of their fair value due to their short-term
nature.
LONG-TERM DEBT:
The fair value of the Company's long-term debt is deemed to be
substantially equal to the carrying value. The outstanding
amount is not significant and obtaining quoted fair values for
comparable financial instruments is impractical.
17
-86-
<PAGE>
FAMOUS FIXINS, INC.
INTERIM FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999
UNAUDITED
TABLE OF CONTENTS
-----------------
PAGE
----
INTERIM BALANCE SHEET (UNAUDITED) 1
INTERIM STATEMENT OF OPERATIONS (UNAUDITED) 2
INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) 3
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) 4
NOTES TO INTERIM FINANCIAL STATEMENTS 5
-87-
<PAGE>
FAMOUS FIXINS, INC.
INTERIM BALANCE SHEET
(UNAUDITED)
<TABLE>
JUNE 30
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
A S S E T S
-----------
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 245,840 $133,141
Accounts receivable 651,733 45,547
Merchandise inventory 71,545 49,324
Prepaid expenses 60,125
---------- --------
TOTAL CURRENT ASSETS 1,029,243 228,012
---------- --------
PLANT AND EQUIPMENT
- -------------------
Furniture and fixtures 9,309
Machinery and equipment 9,406 8,406
---------- --------
18,715 8,406
Less: Accumulated depreciation 5,137 1,926
---------- --------
NET PLANT AND EQUIPMENT 13,578 6,480
---------- --------
OTHER ASSETS
- ------------
Security deposits 2,400 2,400
Costs incurred in connection with a securities
offering in progress 40,647
---------- -------
TOTAL OTHER ASSETS 2,400 43,047
---------- -------
$1,045,221 $277,539
========== ========
</TABLE>
1
-88-
<PAGE>
<TABLE>
JUNE 30
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
Current installments of long-term note payable to bank $ 23,988 $
Note payable to related party 104,303 191,848
Accounts payable and accrued expenses 669,231 126,121
Taxes payable - other than on income 2,510 2,547
Income taxes payable 625 625
Subscribers' deposits on common stock, net 250,000
---------- ---------
TOTAL CURRENT LIABILITIES 800,657 571,141
---------- ---------
LONG-TERM LIABILITY
- -------------------
Long-term note payable to bank, net of current installments 41,029
---------- ---------
STOCKHOLDERS' EQUITY
- --------------------
Common stock, $.001 par value per share:
Authorized 25,000,000 shares
Issued and outstanding
10,462,624 shares in 1999; 6,248,891 shares in 1998 10,462 6,249
Additional paid-in capital 1,247,064 239,268
Accumulated deficit (993,991) (539,119)
---------- ---------
263,535 (293,602)
Less: Common stock subscription receivable 60,000
---------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 203,535 (293,602)
---------- ---------
$1,045,221 $ 277,539
========== =========
</TABLE>
-89-
<PAGE>
FAMOUS FIXINS, INC.
INTERIM STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
SIX MONTHS ENDED JUNE 30
-------------------------
1999 1998
---------- ---------
AMOUNT AMOUNT
---------- ---------
<S> <C> <C>
NET SALES $1,197,186 $ 191,569
---------- ---------
COST OF GOODS SOLD
- ------------------
Merchandise inventory at beginning of period 27,420 61,186
Purchases 663,808 103,009
Other direct costs 69,134 2,956
---------- ---------
760,362 167,151
Less: Merchandise inventory at end of period 71,545 49,324
---------- ---------
TOTAL COST OF GOODS SOLD 688,817 117,827
---------- ---------
GROSS PROFIT ON SALES 508,369 73,742
---------- ---------
OTHER INCOME - MANAGEMENT
AND DISTRIBUTION SERVICES 15,000
---------- ---------
TOTAL INCOME 508,369 88,742
---------- ---------
OPERATING EXPENSES
- ------------------
Selling expenses 429,198 301,297
General and administrative expenses 202,782 83,031
Interest expense, net 3,402 7,907
---------- ---------
TOTAL OPERATING EXPENSES 635,352 392,235
---------- ---------
OPERATING LOSS BEFORE
PROVISION FOR INCOME TAXES (127,013) (303,493)
PROVISION FOR INCOME TAXES 1,334 625
---------- ---------
NET LOSS $ (128,347) $(304,118)
========== =========
Net loss per common share, basic $(0.014) $(0.049)
Net loss per common share, assuming
full dilution $(0.013) $(0.049)
Weighted average number of common shares
outstanding:
Basic 9,261,796 6,241,558
Assuming full dilution 9,919,045 6,241,558
</TABLE>
2
-90-
<PAGE>
FAMOUS FIXINS, INC.
INTERIM STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(128,347) $(304,118)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Noncash items:
Depreciation 1,559 665
Value of common stock issued for services
received by the Company 121,827 11,000
Value of warrants issued for services received
by the Company 111,896 131,242
(Increase) decrease in assets:
Accounts receivable - net (638,120) (32,128)
Merchandise inventory (44,125) 11,862
Prepaid expenses (10,125) 2,227
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 535,093 (3,838)
Taxes payable - other than on income 867 1,383
Increase in security deposits (2,400)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (49,475) (184,105)
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Payments for plant and equipment additions (2,102)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 281,483 102,265
Proceeds of long-term debt 35,000
Repayments of long-term debt (10,668)
Payments of note payable to related party (30,000) (5,413)
Decrease in stockholders loans (11,154)
Costs incurred in connection with a securities
offering in progress (25,872)
Subscribers' deposits on common stock, net 250,000
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 275,815 309,826
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 226,340 123,619
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,500 9,522
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 245,840 $ 133,141
========= =========
Supplemental information about cash payments is as follows:
Cash payments for interest $ 9,509 $ 6,110
Cash payments for income taxes $ 625 $ 325
Supplemental disclosure of noncash financing activities:
Common stock subscription received for common shares issued $ 60,000 $ -
</TABLE>
3
-91-
<PAGE>
FAMOUS FIXINS, INC.
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
Additional
Paid-In Common Stock
Common Stock Capital Accumulated Subscription
Total Shares Amount (Deficit) Deficit Receivable
--------- --------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999
------------------------------
BALANCE (DEFICIT) - JANUARY 1, 1999 $(195,824) 6,883,891 $ 6,883 $ 662,937 $(865,644) $
Issuance of common shares in a
securities offering in
February 1999 - net 293,984 2,433,233 2,433 351,551 (60,000)
Issuance of common shares for
services received 121,826 1,145,500 1,146 120,680
Issuance of warrants for services
rendered 111,896 111,896
Net loss - Six months ended
June 30, 1999 (128,347) (128,347)
--------- ---------- ------- ---------- --------- --------
BALANCE - JUNE 30, 1999 $ 203,535 10,462,624 $10,462 $1,247,064 $(993,991) $(60,000)
========= ========== ======= ========== ========= ========
SIX MONTHS ENDED JUNE 30, 1998
------------------------------
BALANCE (DEFICIT) - JANUARY 1, 1998 $(233,991) 6,105,180 $ 6,105 $ (5,095) $(235,001) $
Issuance in June 1998 of common
shares on a one for one basis
for common shares sold in
January 1998 by the New York
Subsidiary in its securities offering 102,265 132,711 133 102,132
Issuance of common shares for goods
and services received 11,000 11,000 11 10,989
Issuance of warrants for services
rendered 131,242 131,242
Net loss - Six months ended
June 30, 1998 (304,118) (304,118)
--------- ---------- ------- ---------- --------- --------
BALANCE (DEFICIT) - JUNE 30, 1998 $(293,602) 6,248,891 $ 6,249 $ 239,268 $(539,119) $
========= ========== ======= ========== ========= ========
4
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999
NOTE 1. STATEMENT OF INFORMATION FURNISHED
----------------------------------
The accompanying unaudited interim financial statements have been
prepared in accordance with Form 10-SB instructions and in the opinion of
management contains all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of June
30, 1999, the results of operations for the six month period ended June 30,
1999, and the statements of cash flows and stockholders' equity for the six
month period ended June 30, 1999. These results have been determined on the
basis of generally accepted accounting principles and practices and applied
consistently with those used in the preparation of the Company's 1998
financial statements.
Certain information and footnote disclosures normally included in
the financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying financial statements be read in conjunction with the
financial statements and notes thereto incorporated by reference in the
Company's 1998 financial statements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BUSINESS ACTIVITIES OF THE COMPANY
----------------------------------
The Company is a promoter and marketer of celebrity endorsed
food products. In April 1999, the Company introduced its cereal product
lines which currently include those bearing the likenesses, names and
endorsements of: Cal Ripken, Jr.; Sammy Sosa; Jeff Bagwell, Ken Caminitti
and Craig Biggio; Alex Rodriguez; and, of several other celebrity athletes as
to whom contracts have been signed and additional product lines are in
various stages of development, including Derek Jeter, Alonzo Mourning, Barry
Bonds and Jake Plummer. In addition, the Company continues to distribute the
Olympia Dukakis Greek salad dressings line. These products are sold directly
by the Company, and also through distribution agreements with third parties,
to supermarket chains in various parts of the United States.
In August 1998, the Company received approval to trade its
common shares on the "OTC Bulletin Board".
In 1999, the Company has issued an additional 3,578,733 shares
of common stock in exchange for cash and services aggregating $475,810 which
as at June 30, 1999 (a) $293,984 was collected by the Company; (b) $60,000 is
receivable under a stock subscription agreement; and (c) $121,826 has been
provided in various services. The offerings are pursuant to the exemptions
from registration with the Securities and Exchange Commission (SEC) provided
by Section 4(2) of the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, including Regulation D, and under
applicable state laws, rules and regulations.
5
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<PAGE>
FAMOUS FIXINS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1999
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
------------------------------------------
BUSINESS ACTIVITIES OF THE COMPANY (CONTINUED)
----------------------------------
The Company accounts for warrants issued to purchase common
shares in connection with services rendered to the Company using the fair
value method prescribed in SFAS NO. 123 "Accounting for Stock-Based
Compensation". Stock-based compensation cost charged to operations for the
six months ended June 30, 1999 was $111,896.
USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS
--------------------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
MERCHANDISE INVENTORY
---------------------
Merchandise inventory is stated at the lower of cost or market
value on a first-in, first-out basis.
PLANT AND EQUIPMENT
-------------------
Plant and equipment are stated at cost, less accumulated
depreciation. The cost of major improvements and betterments to existing
plant and equipment are capitalized, while maintenance and repairs are
charged to expense when incurred. Upon retirement or other disposal of plant
and equipment, the profit realized or loss sustained on such transaction is
reflected in income. Depreciation is computed on the cost of plant and
equipment on the straight-line method, based upon the estimated useful lives
of the assets.
EARNINGS PER SHARE
------------------
In accordance with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share", basic earnings
per share is computed by dividing net income or loss by the number of
weighted-average common shares outstanding during the period. Earnings per
share, assuming dilution, is computed by dividing net income or loss by the
number of weighted-average common shares and common stock equivalents
outstanding during the period.
6
-94-
<PAGE>
PART III
- -----------------------------------------------------------------------------
ITEM 1. INDEX TO EXHIBITS
- -----------------------------------------------------------------------------
The following exhibits are filed with this Form 10-SB pursuant to Item
601 of Regulation SB.
Exhibit SEC .
Number Reference No. Description
- ------- ------------- -----------
1 2.1 Plan and Agreement of Reorganization between
Spectrum Resources, Inc. and Famous Fixins, Inc.
2 2.2 Agreement and Plan of Merger between Famous
Fixins, Inc., a Nevada corporation, and Famous
Fixins Holding Company, Inc., a New York
corporation
3 2.3 Agreement and Plan of Merger between Famous
Fixins, Inc., a New York corporation, and Famous
Fixins Holding Company, Inc., a New York
corporation
4 3(i)(1) Articles of Incorporation of Spectrum Resources,
Inc.
5 3(i)(2) Certificate of Incorporation of Famous Fixins
Holding Company, Inc.
6 3(i)(3) Articles of Merger for Famous Fixins, Inc., a
Nevada corporation, and Famous Fixins Holding
Company, Inc., a New York corporation
7 3(i)(4) Certificate of Merger of Famous Fixins Holding
Company, Inc., a New York corporation, and Famous
Fixins, Inc., a Nevada corporation
8 3(i)(5) Certificate of Merger of Famous Fixins, Inc., a
New York corporation, and Famous Fixins Holding
Company, Inc.
9 3(i)(6) Certificate of Amendment of the Certificate of
Incorporation of Famous Fixins Holding Company,
Inc.
10 3(ii) By-Laws
11 4.1 Form of Warrant Certificate
12 4.2 Warrant Certificate of Michael Simon
13 4.3 Form of Warrant Certificate
14 9 Voting Agreement between Jason Bauer and Peter
Zorich
15 10.1 Employment Agreement for Jason Bauer
16 10.2 Lease Agreement
17 10.3 License Agreement between Famous Fixins, Inc. and
Olympia Dukakis
18 10.4 Stockplayer.com, Inc. Agreement
19 10.5 Marketing Agreement between Crown Prince, Inc. and
Famous Fixins, Inc.
-95-
<PAGE>
20 10.6 License Agreement between The Tufton Group and
Famous Fixins, Inc.*
21 10.7 License Agreement between Major League Baseball
Properties, Inc. and Famous Fixins, Inc.
22 10.8 License Agreement between Famous Fixins, Inc. and
IMS and KKSM F/S/O Sammy Sosa*
23 10.9 License Agreement between Alex Rodriguez and
Famous Fixins, Inc.*
24 10.10 License Agreement between Famous Fixins, Inc. and
Ken Caminiti, Craig Biggio and Jeff Bagwell*
25 10.11 License Agreement between Killer Bee, Inc. and
Famous Fixins, Inc.*
26 10.12 License Agreement between Famous Fixins, Inc. and
Turn 2, Inc.*
27 10.13 License Agreement between Famous Fixins, Inc. and
Jake "The Snake" Enterprises*
28 10.14 License Agreement between Famous Fixins, Inc. and
Pey Dirt, Inc.*
29 10.15 License Agreement between Famous Fixins, Inc. and
Alonzo Mourning*
30 10.16 Promotional License Agreement between Famous Fixins,
Inc. and Major League baseball Players Association
31 10.17 Major League Baseball Properties, Inc. License
Agreement
32 10.18 License Agreement between Famous Fixins, Inc. and
Tim Duncan*
33 10.19 Promotion Agreement between Famous Fixins, Inc.
and Sterling Doubleday Enterprises, L.P.*
34 10.20 Financial Consulting Agreement between Famous
Fixins, Inc. and First Atlanta Securities, LLC
35 10.21 License Agreement between Famous Fixins, Inc. and
JAE Endorsements Inc.*
36 11 Statement Concerning Computation of Per Share
Earnings is hereby incorporated by reference to
"Financial Statements" of Part F/S, contained
in this Form 10-SB.
37 27 Financial Data Schedule
* Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act.
In accordance with Rule 24(b)(2), these confidential portions have been
omitted from this exhibit and filed separately with the Commission.
-96-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: October 18, 1999
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
------------------------------------------
Jason Bauer, President, Treasurer and
Chairman of the Board
By: /s/ Peter Zorich
------------------------------------------
Peter Zorich, Executive Vice President,
Secretary and Director
By: /s/ Michael Simon
------------------------------------------
Michael Simon, Executive Vice President
and Director
By: /s/ Lisa Bauer
------------------------------------------
Lisa Bauer, Director
-97-
<PAGE>
INDEX TO EXHIBITS
Exhibit SEC .
Number Reference No. Description
- ------- ------------- -----------
1 2.1 Plan and Agreement of Reorganization between
Spectrum Resources, Inc. and Famous Fixins, Inc.
2 2.2 Agreement and Plan of Merger between Famous
Fixins, Inc., a Nevada corporation, and Famous
Fixins Holding Company, Inc., a New York
corporation
3 2.3 Agreement and Plan of Merger between Famous
Fixins, Inc., a New York corporation, and Famous
Fixins Holding Company, Inc., a New York
corporation
4 3(i)(1) Articles of Incorporation of Spectrum Resources,
Inc.
5 3(i)(2) Certificate of Incorporation of Famous Fixins
Holding Company, Inc.
6 3(i)(3) Articles of Merger for Famous Fixins, Inc., a
Nevada corporation, and Famous Fixins Holding
Company, Inc., a New York corporation
7 3(i)(4) Certificate of Merger of Famous Fixins Holding
Company, Inc., a New York corporation, and Famous
Fixins, Inc., a Nevada corporation
8 3(i)(5) Certificate of Merger of Famous Fixins, Inc., a
New York corporation, and Famous Fixins Holding
Company, Inc.
9 3(i)(6) Certificate of Amendment of the Certificate of
Incorporation of Famous Fixins Holding Company,
Inc.
10 3(ii) By-Laws
11 4.1 Form of Warrant Certificate
12 4.2 Warrant Certificate of Michael Simon
13 4.3 Form of Warrant Certificate
14 9 Voting Agreement between Jason Bauer and Peter
Zorich
15 10.1 Employment Agreement for Jason Bauer
16 10.2 Lease Agreement
17 10.3 License Agreement between Famous Fixins, Inc. and
Olympia Dukakis
18 10.4 Stockplayer.com, Inc. Agreement
19 10.5 Marketing Agreement between Crown Prince, Inc. and
Famous Fixins, Inc.
20 10.6 License Agreement between The Tufton Group and
Famous Fixins, Inc.*
21 10.7 License Agreement between Major League Baseball
Properties, Inc. and Famous Fixins, Inc.
22 10.8 License Agreement between Famous Fixins, Inc. and
IMS and KKSM F/S/O Sammy Sosa*
23 10.9 License Agreement between Alex Rodriguez and
Famous Fixins, Inc.*
24 10.10 License Agreement between Famous Fixins, Inc. and
Ken Caminiti, Craig Biggio and Jeff Bagwell*
25 10.11 License Agreement between Killer Bee, Inc. and
Famous Fixins, Inc.*
26 10.12 License Agreement between Famous Fixins, Inc. and
Turn 2, Inc.*
27 10.13 License Agreement between Famous Fixins, Inc. and
Jake "The Snake" Enterprises*
28 10.14 License Agreement between Famous Fixins, Inc. and
Pey Dirt, Inc.*
29 10.15 License Agreement between Famous Fixins, Inc. and
Alonzo Mourning*
30 10.16 Promotional License Agreement between Famous Fixins,
Inc. and Major League baseball Players Association
31 10.17 Major League Baseball Properties, Inc. License
Agreement
32 10.18 License Agreement between Famous Fixins, Inc. and
Tim Duncan*
33 10.19 Promotion Agreement between Famous Fixins, Inc.
and Sterling Doubleday Enterprises, L.P.*
34 10.20 Financial Consulting Agreement between Famous
Fixins, Inc. and First Atlanta Securities, LLC
35 10.21 License Agreement between Famous Fixins, Inc. and
JAE Endorsements Inc.*
36 11 Statement Concerning Computation of Per Share
Earnings is hereby incorporated by reference to
"Financial Statements" of Part F/S, contained
in this Form 10-SB.
37 27 Financial Data Schedule
* Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act.
In accordance with Rule 24(b)(2), these confidential portions have been
omitted from this exhibit and filed separately with the Commission.
</TABLE>
EXHIBIT 2.1
PLAN AND AGREEMENT OF REORGANIZATION
BETWEEN
SPECTRUM RESOURCES, INC.
(a Nevada corporation)
AND
FAMOUS FIXINS, INC.
(a New York corporation)
This Plan and Agreement of Reorganization is entered into this 28th day
of May, 1998, by and between Spectrum Resources, Inc., a Nevada corporation,
hereinafter referred to as "SPECTRUM", ( the corporate name which will be
changed by way of an Amendment to its Articles of Incorporation, to Famous
Fixins Inc.) and Famous Fixins, Inc., a New York corporation and its
shareholders, hereinafter referred to as "Famous Fixins".
This Plan or Reorganization is within the meaning of Section 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended. SPECTRUM will
acquire from the shareholders of Famous Fixins, substantially all of the
issued and outstanding shares of Famous Fixins in return for FIVE MILLION
FOUR HUNDRED AND NINETY FOUR THOUSAND SIX HUNDRED SIXTY TWO (5,494,662)
shares of the authorized but unissued shares of SPECTRUM. SPECTRUM represents
that such shares are and shall, at the closing, represent 90% of all equity
of SPECTRUM, fully diluted, including any and all rights of any kind to any
equity of SPECTRUM. Famous Fixins will then become and operate as a
subsidiary of SPECTRUM.
AGREEMENT
In order to consummate such plan of reorganization, the parties hereto,
in consideration of the mutual agreements and on the basis of the
representations and warranties hereafter set forth, do hereby agree, as
follows:
ARTICLE I
1.01. Transfer of Famous Fixins capital stock and consideration for
transfer: Subject to the terms and conditions of this Agreement,
substantially all of the Famous Fixins shareholders shall have endorsed and
delivered their certificates to Jason Bauer, President of Famous Fixins, as
Trustee, prior to the closing date, who shall, at such closing, deliver said
certificates to SPECTRUM in exchange for the stated number of shares of
SPECTRUM as set forth in 1.02 below.
1.02. Consideration for transfer to SPECTRUM: On the closing date,
subject to the terms and conditions of this Agreement, and in full
consideration for the transfer and delivery to SPECTRUM of substantially all
the issued and outstanding shares of Famous Fixins, SPECTRUM shall cause to
be delivered by its transfer agent, 5,494,662 shares of the authorized but
unissued capital stock of SPECTRUM. Said 5,494,662 shares shall be broken
down into individual names and amounts as requested in writing by Jason
Bauer, authorized agent for the Famous Fixins shareholders, and when issued,
such shares to be fully paid and nonassessable. Shares shall not be free
trading if they are not at this time registered or covered by any exemption.
Said shares will be restricted in nature and said restriction shall be
reflected on the face of all certificates included in the 5,494,662 shares.
ARTICLE II
2.01. Closing: The time of delivery by Famous Fixins stockholders of
their respective shares as provided in paragraph 1.01 of this Agreement
having already taken place, said shares being held by Jason Bauer, as
authorized agent, and the certificate for 5,494,662 shares as authorized by
the Board of Directors of SPECTRUM being in hand for delivery to Jason Bauer,
as authorized agent, closing shall be effective with the signing of this
Agreement. For purposes of record, closing shall be effective as of the 28th
day of May, 1998, 5 p.m. New York time, at the offices of Famous Fixins,
Inc., which will become the office of SPECTRUM, located at 250 West 72nd
Street, Suite 2501, New York, New York 10023.
ARTICLE III
3.01. Representations and Warranties by Famous Fixins:
(1) Famous Fixins is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York. It
has all requisite corporate power and authority to carry on its business as
now being conducted, to enter into this Agreement and to carry out and
perform the terms and provisions of this Agreement. Famous Fixins is duly
qualified, licensed, or domesticated and in good standing as a foreign
corporation authorized to do business in each jurisdiction wherein the nature
of its activities conducted or the character of its properties make such
qualification, licensing, or domestication necessary.
(2) Famous Fixins is duly and lawfully authorized by its
Articles of Incorporation, to issue the shares of capital stock required by
this Agreement; further, Famous Fixins has no other authorized series or
class of stock. All of the outstanding shares of Famous Fixins's capital
stock have been duly issued.
(3) Famous Fixins has furnished SPECTRUM with an audited Balance
Sheet of Famous Fixins as of December 31, 1997, hereinafter referred to as
the Balance Sheet. Such financial statement presents fairly the financial
condition of Famous Fixins at such date. Specifically, but not by way of
limitation, the Balance Sheet discloses all of the debts, liabilities,
and obligations of any nature (whether absolute, accrued, contingent, or
otherwise, and whether due or to become due) of Famous Fixins at the date
thereof.
(4) Famous Fixins will use its best efforts to obtain prompt
written confirmation of the necessary vote under New York law to approve the
transaction contemplated herein.
3.02 SPECTRUM and its officers represent and warrant to Famous Fixins
and its stockholders as follows:
(1) SPECTRUM is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada.
(2) SPECTRUM's authorized capital stock consists of 25,000,000
shares of common stock, par value $.001. At the close of this Agreement
6,105,180 shares of common stock will be validly issued and outstanding and
no preferred stock will have been issued. This figure reflects the 5,494,662
shares beneficially issued to the shareholders of Famous Fixins.
(3) The execution, delivery, and performance of this Agreement
has been duly authorized by all requisite corporate action. This Agreement
constitutes a valid and binding obligation of SPECTRUM in accordance with its
terms. No provision of the Articles of Incorporation and any amendments
thereto, by-laws and any amendments thereto, or of any contract to which
SPECTRUM is a party or otherwise bound, prevents SPECTRUM from delivering
good title to its shares of such capital stock in the manner contemplated
hereunder.
(4) SPECTRUM has furnished Famous Fixins with an audited
statement prepared by Robert G. Tschida, CPA showing the financial position
of the company as of April 30, 1996 and a statement or statements of
management, covering the period from the end of the audit to the present
time, that there are no current assets, and SPECTRUM, its officers and its
agents do not have actual or constructive knowledge of any liablities, nor
are they aware of any liabilities, and that the corporation, and its
predecessor have had no activities in which it could have incurred any
liabilities since 1990, including, but not limited to, any fees owed to
SPECTRUM's attorneys, accountants, transfer agent(s) or any taxes, lawsuits
or arbitrations, or facts that may support a claim against SPECTRUM or its
shareholders.
(5) All of the SPECTRUM common shares to be issued to Famous
Fixins shareholders will, when so issued, be validly issued and outstanding,
fully paid and nonassessable.
(6) Since the April 30, 1996 date of the Tschida financial
statement, there has not been any material or adverse change in, or event or
condition materially and adversely affecting the condition of SPECTRUM.
(7) SPECTRUM is duly and lawfully authorized by its Articles of
Incorporation to issue the shares of capital stock required by this
Agreement; further, SPECTRUM has no other authorized series or class of
stock. All of the outstanding shares of SPECTRUM's capital stock have been
duly issued. There are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, convertible securities, or other
agreements or arrangements of any character or nature whatever under which
SPECTRUM is or may be obligated to issue or purchase shares of its capital
stock.
(8) Spectrum shall furnish an opinion letter from Kenneth
Christison, attorney for the corporation, opining as to those shares which
are currently issued and outstanding are free trading shares pursuant to the
applicable securities laws and the Rules and Regulations of the Securities
and Exchange Commission.
ARTICLE IV
4.01 Famous Fixins covenants that all statements made herein and
hereto are true and correct to the best of its knowledge, and may be relied
upon by SPECTRUM.
4.02. Famous Fixins covenants and warrants that, to the best of its
knowledge, all books, records and financial statements employed or used in
connection with this Agreement are true and correct, and that the right to
examine same has been extended to SPECTRUM and its representatives.
4.03. Federal Securities Act - Unregistered Stock:
(1) Each Famous Fixins stockholder acknowledges that the shares
of SPECTRUM common stock to be delivered to him pursuant to this Agreement
have not and are not registered under the 1933 Act, as amended, and that
accordingly such stock is not fully transferable except as permitted under
various exemptions contained in the 1933 Act, and the rules of the Securities
and Exchange Commission interpreting said Act. The provisions contained in
this paragraph are intended to ensure compliance with the 1933 Act, as
amended.
(2) Each Famous Fixins stockholder agrees that, unless such
shares are exempt as described above, the certificates evidencing the shares
he will receive shall contain substantially the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THE SAME ARE
REGISTERED UNDER THE SECURITY ACT OF 1933, OR THE COMPANY RECEIVES AN
OPINION FROM COUNSEL SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT
REQUIRED FOR SALE OR TRANSFER OR THAT THE SHARES HAVE BEEN LEGALLY SOLD
IN BROKER TRANSACTIONS PURSUANT TO RULE 144 OF THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION PROMULGATED UNDER
SECURITY ACT OF 1933."
ARTICLE V
Conditions Precedent:
(1) The aggregate number of shares of the corporation's capital
stock tendered by the Famous Fixins stockholders at the closing shall
constitute substantially all of the issued and outstanding Capital Stock of
Famous Fixins, and, in any event, in excess of ninety five percent (95%) of
such Capital Stock.
(2) SPECTRUM shall make available to Famous Fixins or its
authorized agent(s) such books and records of SPECTRUM as it desires in
furtherance of its due diligence review of SPECTRUM, which shall include, but
not be limited to, all stock ledgers, Board minutes and resolutions,
shareholders minutes and resolutions, contracts, leases, SEC and state
filings, officer's certificates, opinions of counsel, accountant reports,
court filings if any, UCC filings if any and employment agreements.
(3) Prior to the closing date, on a mutually agreeable date,
time and place, the parties shall deliver a list of documents which they
require to be produced at the closing.
ARTICLE VI
6.01 Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.02. This Agreement shall be construed under and in accordance with
the laws of the State of New York. Any proceedings, claims or actions of any
kind hereunder, if instituted by or on behalf of SPECTRUM, its successors or
assigns, shall be brought in the courts of the County, City and State of New
York.
6.03. This Agreement shall be binding on and inure to the benefit of
and be enforceable by the Famous Fixins shareholders and SPECTRUM, their
respective heirs, executors, administrators, legal representatives,
successors, and assigns except as otherwise expressly provided herein.
6.04. Should there be any litigation arising from this transaction, the
prevailing party shall be entitled to recover reasonable attorney's fees from
the other party, which fees may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose.
These fees shall be in addition to any other relief which may be awarded.
ARTICLE VII
7.01. Resignations: Immediately upon the Closing, Spectrum Resources,
Inc. shall hold a Special Meeting of its Board of Directors, at which time
Russell Ortman and Leona Jamison who are the current officers and all of the
directors of Spectrum Resources, Inc. shall submit their respective
resignations, and at which time Jason Bauer, and his slate of officers and
directors shall be appointed in their places.
7.02. Amendment to Articles of Incorporation. Prior to Closing,
Spectrum Resources, Inc. shall have submitted to the Secretary of State of
the State of Nevada, and received a confirmation from said Secretary of State
that the Amendment to the Articles have been approved changing the name of
the corporation from Spectrum Resources, Inc., to Famous Fixins Inc.
IN WITNESS WHEREOF, the parties hereto have executed this Plan and
Agreement of Reorganization on the date first set forth, at New York, New
York.
SPECTRUM RESOURCES, INC.
by: /s/ Russell Ortman
-------------------------------
Russell Ortman, President
by: /s/ Leona Jamison
-------------------------------
Leona Jamison, Secretary
FAMOUS FIXINS, INC.
by: /s/ Jason Bauer
-------------------------------
Jason Bauer, President
by: /s/ Jason Bauer
-------------------------------
Secretary
/s/ Jason Bauer
-------------------------------
Jason Bauer, as Trustee
for all Shareholders of
Famous Fixins, Inc.
<PAGE>
KENNETH M. CHRISTISON
ATTORNEY AT LAW
10 SEADRIFT LANDING
TIBURON, CA 94920
TELEPHONE: 415-505-5086
FACSIMILE: 415-381-4317
June 5, 1998
SPECTRUM RESOURCES, INC.
3030 BRIDGEWAY
SAUSALITO, CA 94965
Re: Status of Issuance of Shares of Common Stock
Dear Madam or Sir:
I have been requested to provide a letter stating my opinion of the
validity of issuance of the shares of common stock of SPECTRUM RESOURCES,
INC. ("SPECTRUM") issued and outstanding as of May 28, 1998.
As the basis for the opinion expressed below, I have reviewed, among
others, the following documents provided to me by SPECTRUM; as deemed
appropriate, I have discussed various matters related to the opinion with
present and prior management of SPECTRUM:
1. Articles of Incorporation of TINDERBLOCK, INC. in the State of
Utah dated 2-09-84;
2. Bylaws of the Company;
3. Opinion letter dated 11-04-85 rendered by O.Robert Meredith, Esq.;
4. Articles of Incorporation of SPECTRUM, RESOURCES, INC. in the
State of Nevada, dated 07-27-95;
5. Articles of Merger of TINDERBLOCK, INC. into SPECTRUM, dated
07-31-95;
6. Opinion Letter dated 8-15-95 rendered by John H.Convery, Esq.;
7. Minutes of the meeting of the board of directors of SPECTRUM,
dated 10-20-95;
8. Minutes of the meeting of the board of directors of SPECTRUM,
dated 01-09-96;
9. Shareholders List for SPECTRUM, dated May 28, 1998
DISCUSSION
TINDERBLOCK, INC. was incorporated in Utah on February 9, 1984 as Straw
Dog, Inc. The Articles of Incorporation authorized the issuance of a total
of 50,000,000 shares of Common Stock ($0.001 par value). Pursuant to a
registration with the Utah Securities Division effective September 26, 1984,
1,000,000 shares of common stock were sold to the public at a price of $.02
per share. After a name change to TINDERBLOCK, INC. ("TINDERBLOCK") in 1985,
TINDERBLOCK was merged into SPECTRUM RESOURCES, INC., a Nevada corporation,
in July 1995, at which time there were 7,666,666 shares of TINDERBLOCK common
stock issued and outstanding. By terms of the Merger Agreement every three
(3) shares of TINDERBLOCK stock were converted into one (1) share of SPECTRUM
stock. On October 20, 1995, the SPECTRUM board of directors approved a one (1)
for ten (10) reverse split of stock, after which there were 255,588
shares of common stock issued and outstanding.
On January 12, 1996, pursuant to a resolution of the board of
directors, SPECTRUM issued 354,930 shares of common stock to Phoenix Pacific
Property Trust as consideration for performance of certain services and
payment of certain costs on behalf of the Company.
On May 28, 1998, as provided in a Reorganization Agreement between
SPECTRUM and Famous Fixins, Inc., a New York corporation and pursuant to a
resolution of the board of directors, SPECTRUM issued 5,494,662 shares of
common stock (the "Famous Fixins Shares") to Jason Bauer, Trustee for
Shareholders of Famous Fixins, Inc. Upon consideration of the Reorganization
Agreement, those shares are to be distributed, pro rata, to said shareholders
as consideration for the acquisition by SPECTRUM of all issued and
outstanding shares of Famous Fixins, Inc. common stock.
CONCLUSION
Based on the information reviewed and the applicable statutes and
regulations, it is my opinion that the 610,518 shares of SPECTRUM common
stock which were issued on or before January 12, 1996, were validly issued
and are fully paid and non-assessable. Further, it is my opinion that upon
consummation of the Reorganization Agreement between SPECTRUM and Famous
Fixins and distribution of the 5,494,662 SPECTRUM shares issued in trust on
May 28, 1998, those shares will also be validly issued, fully paid, and non-
assessable.
This letter and the opinions expressed herein are intended for the
information and use of the Company. No other use of this letter may be made
without my prior written consent.
Very truly yours,
/s/ Kenneth Christianson
------------------------
Kenneth M Christianson
<PAGE>
CERTIFICATION BY OFFICER
OF
SPECTRUM RESOURCES, INC.
I, Russell Ortman, President of Spectrum Resources, Inc., a Nevada
corporation, hereby state:
1. I have been the President of Spectrum Resources, Inc. since January
of 1997.
2. Attached hereto and made a part of this Certificate is an audited
financial statement prepared by Robert G. Tachida, C.P.A., the accountant for
the corporation showing that as of April of 1996, the corporation has no
assets nor any liabilities.
3. Since I took over the position of President of Spectrum Resources,
Inc., the sole activity of the corporation has been to find a candidate for
merging into this corporation. Any and all expenses which have been incurred
in this endeavor have not been charged to the corporation and have been
personal expenses which have been advanced by shareholders of the corporation
who would most benefit by the successful completion of such an acquisition.
4. To the best of my knowledge and information, the company has had no
activity, either as Spectrum Resources, Inc. or as its predecessor
Tinderblock, Inc., since 1990.
Executed at Dallas, Texas this 15th day of May, 1998.
/s/ Russell Ortman
---------------------------
Russell Ortman,President
<PAGE>
CERTIFICATION BY OFFICER
OF
SPECTRUM RESOURCES, INC.
I, Gary Luttrell, hereby certify:
(1) I served as President and Director of the corporation from its
incorporation, until Russell Ortman took over in January of 1997.
(2) I have reviewed the financial statement prepared by Robert G.
Tschida dated as of April 1996, and can certify that the financial statement
relects the position of the company as of that date. In addition, from the
date of the financial statement until Russell Ortman took over the position of
President of the corporation, I can attest that the corporation did not
purchase any assets, nor did it incurr any liabilities which would
substantially alter the position of the company as set forth in the financial
statement.
Executed at Sausalito, California, this 26th day of May, 1998.
/s/ Gary Luttrell
---------------------------
Gary Luttrell
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated this 3rd day of September, 1998
(the "Agreement"), pursuant to Section 92A.190 of the Nevada Revised Statutes
and Section 904 of the New York Business Corporation Law, between Famous
Fixins, Inc., a Nevada corporation ("FFI"), and Famous Fixins Holding
Company, Inc., a New York corporation ("FFHC").
WITNESSETH THAT:
WHEREAS, all of the constituent corporations desire to merge into a
single corporation;
NOW, THEREFORE, the corporations, parties to this Agreement and Plan of
Merger, in consideration of the premises and the mutual covenants, agreements
and provisions contained herein, do hereby prescribe the terms and conditions
of said merger and plan of carrying the same into effect, as follows:
FIRST: FFI, which shall be the merged corporation, shall be merged
into FFHC, which shall be the surviving corporation, pursuant to the terms of
this Agreement.
SECOND: There are one share of common stock of the surviving
corporation heretofore issued or outstanding. FFI has an authorized capital
of 25,000,000 shares of common stock, par value $.001 per share ("Common
Stock"), and 6,633,891 shares of Common Stock issued and outstanding on the
date hereof. Upon filing of Certificate of Merger and Articles of Merger
with respect to the merger with the Secretary of State of New York and the
Secretary of State of Nevada, each share of Common Stock of FFI, the merged
corporation, issued and outstanding immediately prior to the merger and all
rights in respect thereof shall forthwith be changed and converted into one
share of common stock of the surviving corporation, FFHC ("NY Common Stock").
Following the effective date of the merger, each holder of any certificate
representing shares of common stock of the merged corporation shall surrender
the same to the surviving corporation, and upon such surrender, each such
holder shall be entitled to receive a stock certificate of the surviving
corporation, representing the number of shares of NY Common Stock, par value
$.001 per share, of the surviving corporation on the basis provided
hereinabove. Until so surrendered, any certificate representing shares of
stock of the merged corporation to be converted into stock of the surviving
corporation as provided herein, may be treated by the surviving corporation
for all corporate purposes as evidencing the ownership of shares of the
surviving corporation as though said surrender and exchange shall have taken
place. After the effective date of this Agreement, any uncertificated shares
of common stock of the merged corporation registered with such corporation
shall be cancelled, and the holder of any such uncertificated but registered
shares shall be entitled to receive the number of shares of NY Common Stock
of the surviving corporation into which such uncertificated shares of stock
of the merged corporation are required to be converted as provided herein.
THIRD: Certain terms and conditions of the merger are as follows:
(a) The Certificate of Incorporation of FFHC as in effect on the
date of the merger provided for in this Agreement and Plan of Merger shall
continue in full force and effect as the Certificate of Incorporation of the
corporation surviving this merger, unless and until the same shall be amended
or modified in accordance with the provision thereof and of the Business
Corporation Law of New York, which power to amend or modify is hereby
expressly reserved. Such Certificate of Incorporation shall constitute the
Certificate of Incorporation of FFHC separate and apart from this Agreement
and Plan of Merger and may be separately certified as the Certificate of
Incorporation of FFHC.
(b) The Bylaws of the surviving corporation as they exist on the
effective date of this merger shall be and remain the Bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(c) The directors and officers of the surviving corporation
shall continue in office as directors and officers of the surviving
corporation until the next annual meeting of stockholders and until their
successors shall have been elected and qualify.
(d) This merger shall become effective upon filing of the
Certificate of Merger of FFHC and the Articles of Merger of FFI in the forms
of Exhibits A and B annexed hereto, respectively, with the Secretary of State
of New York and the Secretary of State of Nevada.
(e) Upon the effectiveness of the merger as provided herein, all
of the property, rights, privileges, franchises, patents, trademarks,
licenses, registrations and other assets of every kind and description of the
merged corporations shall be transferred to, vested in, and devolve upon the
surviving corporation without further act or deed, and all property, rights,
and every other interest of the surviving corporation and the merged
corporations shall be as effectively the property of the surviving
corporation as they were of the surviving corporation and the merged
corporation, respectively.
(f) Prior to the effectiveness of the merger, the merged
corporations hereby agree from time to time, as and when requested by the
surviving corporation or by its successors or assigns, to execute and deliver
or cause to be executed and delivered all such documents, deeds and
instruments and to take or cause to be taken such further or other action as
the surviving corporation may deem necessary or desirable in order to vest in
and confirm to the surviving corporation title to and possession of any
property of the merged corporations acquired or to be acquired by reason of
or as a result of the merger herein provided for and otherwise to carry out
the intent and purposes hereof, and the proper officers and directors of the
merged corporations are fully authorized in the name of the merged
corporations or otherwise to take any and all such action; the proper
officers and directors of the surviving corporation are fully authorized, in
the name of the merged corporations or otherwise, following the effectiveness
of the merger, to execute and deliver or cause to be executed and delivered
all such documents, deeds and instruments and to take or cause to be taken
such further or other actions as the surviving corporation may deem necessary
or desirable in order to vest in and confirm to the surviving corporation
title to and possession of any property of the merged corporations acquired
or to be acquired by reason of or as a result of the merger herein provided
for and otherwise to carry out the intent and purposes hereof.
FOURTH: (a) Directors. The names and post office addresses of the
directors of FFHC, who shall be four in number and who shall hold office from
the effective date until the next annual meeting of stockholders of FFHC and
until their successors shall be duly elected and qualify, are as follows:
Name Post Office Address
- -------------------------- ---------------------------------
Jason Bauer 300 West 72nd Street, Apt. 4C
New York, New York 10023
Peter Zorich 418 Valley Road #2
Montclair, New Jersey 07043
Lisa Bauer, Director 300 West 72nd Street, Apt. 4C
New York, New York 10023
Olympia Dukakis, Director 222 Upper Mountain Avenue
Upper Mountain, New Jersey 07043
(b) Officers. The names and post office addresses of the
officers of FFHC who shall be three in number and who shall hold office from
the effective date until their successors shall be duly elected and qualify
or until they shall resign or be removed from office, are as follows:
Name Offices Post Office Address
- -------------- ---------------- -----------------------
Jason Bauer President 300 W. 72nd St.
Treasurer New York, NY 10023
Peter Zorich Vice President 418 Valley Road #2
Secretary Montclair, NJ 07043
(c) Vacancies. If, upon the effective date, a vacancy
exists still on the Board of Directors or in any of the offices of FFHC as
the same are specified above, such vacancy shall thereafter be filled in the
manner provided by law and the Bylaws of FFHC.
FIFTH: Anything contained herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned by the Board
of Directors of any constituent corporation at any time prior to the date of
filing of a Certificate of Merger with respect to the merger with the
Secretary of State of New York, and an Articles of Merger with the Secretary
of State of Nevada, provided that an amendment made subsequent to the
adoption of this Agreement and Plan of Merger by the stockholders of any
constituent corporation shall not (a) alter or change the amount or kind of
shares, securities, cash, property and/or rights to be received in exchange
for or on conversion of all or any of the shares of any class or series
thereof of such constituent corporation, (b) alter or change any term of the
Certificate of Incorporation of the surviving corporation to be effected by
the merger, or (c) alter or change any of the terms and conditions of this
Agreement and Plan of Merger if such alteration or change would adversely
affect the holders of any class of such constituent corporation or any series
of any such class.
IN WITNESS WHEREOF, the parties to this Agreement and Plan of Merger,
pursuant to the approval and authority duly given by resolutions adopted by
their respective Boards of Directors and by their shareholders have caused
this Agreement and Plan of Merger to be executed by the President of each
party hereto as the respective act, deed and agreement of each of said
corporations, on this 3rd day of September, 1998.
FAMOUS FIXINS, INC.
(a Nevada corporation)
By: /s/ Jason Bauer
----------------------------
Jason Bauer,
President
By: /s/ Peter Zorich
----------------------------
Peter Zorich,
Secretary
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
By: /s/ Jason Bauer
----------------------------
Jason Bauer,
President
By: /s/ Peter Zorich
----------------------------
Peter Zorich,
Secretary
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated this 3rd day of September, 1998
(the "Agreement"), pursuant to Section 905 of the New York Business
Corporation Law, between Famous Fixins, Inc., a New York corporation ("FFI"),
and Famous Fixins Holding Company, Inc., a New York corporation ("FFHC").
WITNESSETH THAT:
WHEREAS, all of the constituent corporations desire to merge into a
single corporation;
NOW, THEREFORE, the corporations, parties to this Agreement and Plan of
Merger, in consideration of the premises and the mutual covenants, agreements
and provisions contained herein, do hereby prescribe the terms and conditions
of said merger and plan of carrying the same into effect, as follows:
FIRST: FFI, which shall be the merged corporation, shall be merged
into FFHC, which shall be the surviving corporation, pursuant to the terms of
this Agreement.
SECOND: There are 6,633,891 shares of common stock of the surviving
corporation heretofore issued or outstanding. FFI has an authorized capital
of 25,000,000 shares of common stock, par value $.001 per share ("Common
Stock"), and 4,237,039 shares of Common Stock issued and outstanding on the
date hereof. Upon filing of Certificate of Merger with respect to the merger
with the Secretary of State of New York, each share of Common Stock of FFI,
the merged corporation, issued and outstanding immediately prior to the
merger and all rights in respect thereof shall forthwith be cancelled. After
the effective date of this Agreement, any uncertificated shares of common
stock of the merged corporation registered with such corporation shall be
cancelled, and the holder of any such uncertificated but registered shares
shall be entitled to receive the number of shares of NY Common Stock of the
surviving corporation into which such uncertificated shares of stock of the
merged corporation are required to be converted as provided herein.
THIRD: Certain terms and conditions of the merger are as follows:
(a) The Certificate of Incorporation of FFHC as in effect on the
date of the merger provided for in this Agreement and Plan of Merger shall
continue in full force and effect as the Certificate of Incorporation of the
corporation surviving this merger, unless and until the same shall he amended
or modified in accordance with the provision thereof and of the Business
Corporation Law of New York, which power to amend or modify is hereby
expressly reserved. Such Certificate of Incorporation shall constitute the
Certificate of Incorporation of FFHC separate and apart from this Agreement
and Plan of Merger and may be separately certified as the Certificate of
Incorporation of FFHC.
(b) The Bylaws of the surviving corporation as they exist on the
effective date of this merger shall be and remain the Bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(c) The directors and officers of the surviving corporation
shall continue in office as directors and officers of the surviving
corporation until the next annual meeting of stockholders and until their
successors shall have been elected and qualify.
(d) This merger shall become effective upon filing of the
Certificate of Merger of FFHC and the Articles of Merger of FFI in the forms
of Exhibits A and B annexed hereto, respectively, with the Secretary of State
of New York and the Secretary of State of Nevada.
(e) Upon the effectiveness of the merger as provided herein, all
of the property, rights, privileges, franchises, patents, trademarks,
licenses, registrations and other assets of every kind and description of the
merged corporations shall be transferred to, vested in, and devolve upon the
surviving corporation without further act or deed, and all property, rights,
and every other interest of the surviving corporation and the merged
corporations shall be as effectively the property of the surviving
corporation as they were of the surviving corporation and the merged
corporation, respectively.
(f) Prior to the effectiveness of the merger, the merged
corporations hereby agree from time to time, as and when requested by the
surviving corporation or by its successors or assigns, to execute and deliver
or cause to be executed and delivered all such documents, deeds and
instruments and to take or cause to be taken such further or other action as
the surviving corporation may deem necessary or desirable in order to vest in
and confirm to the surviving corporation title to and possession of any
property of the merged corporations acquired or to be acquired by reason of
or as a result of the merger herein provided for and otherwise to carry out
the intent and purposes hereof, and the proper officers and directors of the
merged corporations are fully authorized in the name of the merged
corporations or otherwise to take any and all such action; the proper
officers and directors of the surviving corporation are fully authorized, in
the name of the merged corporations or otherwise, following the effectiveness
of the merger, to execute and deliver or cause to be executed and delivered
all such documents, deeds and instruments and to take or cause to be taken
such further or other actions as the surviving corporation may deem necessary
or desirable in order to vest in and confirm to the surviving corporation
title to and possession of any property of the merged corporations acquired
or to be acquired by reason of or as a result of the merger herein provided
for and otherwise to carry out the intent and purposes hereof.
FOURTH: (a) Directors. The names and post office addresses of the
directors of FFHC, who shall be four in number and who shall hold office from
the effective date until the next annual meeting of stockholders of FFHC and
until their successors shall be duly elected and qualify, are as follows:
Name Post Office Address
- -------------------------- ------------------------------------
Jason Bauer 300 West 72nd Street, Apt. 4C
New York, New York 10023
Peter Zorich 418 Valley Road #2
Montclair, New Jersey 07043
Lisa Bauer, Director 300 West 72nd Street, Apt. 4C
New York, New York 10023
Olympia Dukakis, Director 222 Upper Mountain Avenue
Upper Mountain, New Jersey 07043
(b) Officers. The names and post office addresses of the
officers of FFHC who shall be three in number and who shall hold office from
the effective date until their successors shall be duly elected and qualify
or until they shall resign or be removed from office, are as follows:
Name Offices Post Office Address
- -------------- ---------------- -----------------------
Jason Bauer President 300 W. 72nd St.
Treasurer New York, NY 10023
Peter Zorich Vice President 418 Valley Road #2
Secretary Montclair, NJ 07043
(c) Vacancies. If, upon the effective date, a vacancy exists
still on the Board of Directors or in any of the offices of FFHC as the same
are specified above, such vacancy shall thereafter be filled in the manner
provided by law and the Bylaws of FFHC.
FIFTH: Anything contained herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and abandoned by the Board
of Directors of any constituent corporation at any time prior to the date of
filing of a Certificate of Merger with respect to the merger with the
Secretary of State of New York, provided that an amendment made subsequent to
the adoption of this Agreement and Plan of Merger by the stockholders of any
constituent corporation shall not (a) alter or change the amount or kind of
shares, securities, cash, property and/or rights to be received in exchange
for or on conversion of all or any of the shares of any class or series
thereof of such constituent corporation, (b) alter or change any term of the
Certificate of Incorporation of the surviving corporation to be effected by
the merger, or (c) alter or change any of the terms and conditions of this
Agreement and Plan of Merger if such alteration or change would adversely
affect the holders of any class of such constituent corporation or any series
of any such class.
IN WITNESS WHEREOF, the parties to this Agreement and Plan of Merger,
pursuant to the approval and authority duly given by resolutions adopted by
their respective Boards of Directors and by their shareholders have caused
this Agreement and Plan of Merger to be executed by the President of each
party hereto as the respective act, deed and 'agreement of each of said
corporations, on this 3rd day of September, 1998.
FAMOUS FIXINS, INC.
(a New York corporation)
By: /s/ Jason Bauer
----------------------------
Jason Bauer,
President
By: /s/ Peter Zorich
----------------------------
Peter Zorich,
Secretary
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
By: /s/ Jason Bauer
----------------------------
Jason Bauer,
President
By: /s/ Peter Zorich
----------------------------
Peter Zorich,
Secretary
EXHIBIT 3(i)(1)
ARTICLES OF INCORPORATION
OF
SPECTRUM RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under the laws of
the State of Nevada and we do hereby certify:
I.
The name of this corporation is SPECTRUM RESOURCES, INC.
II.
The resident agent of said corporation shall be Pacific Corporate
Services, Inc., 7631 Bermuda Road, Las Vegas, NV 89123 and such other offices
as may be determined by the By-Laws in and outside of the State of Nevada.
III.
The objects to be transacted, business and pursuit and nature of the
business, promoted or carried on by this corporation are and shall continue
to be engaged in any lawful activity.
IV.
The members of the governing board shall be styled Directors and the
first Board of Directors shall consist of one (1). The number of directors
and shareholders of this corporation may, from time to time, be increased or
decreased by an amendment to the By-Laws of this corporation in that regard,
and without the necessity of amending these Articles of Incorporation. The
name and address of the first Board of Directors and of the incorporator
signing these Articles is as follows:
Gary Luttrell #15 Rodeo, Unit 5
Sausalito, CA 94965
V.
The corporation is to have perpetual existence.
VI.
The total authorized capitalization of this Corporation shall be and is
the sum of 50,000,000 shares Common stock at $.001 par value, said stock to
carry full voting power and the said shares shall be issued fully paid at
such time as the Board of Directors may designate in exchange for cash,
property, or services, the stock of other corporations or other values,
rights, or things, and the judgment of the Board of Directors as to the value
thereof shall be conclusive.
VII.
The capital stock shall be and remain non-assessable. The private
property of the stockholders shall not be liable for the debts or liabilities
of the Corporation.
IN WITNESS WHEREOF, I have set my hand this 25th day of July, 1995.
/s/ Gary Luttrell
-----------------
Gary Luttrell
STATE OF CALIFORNIA)
)ss
COUNTY OF MARIN )
On this 25th, day of July, 1995, before me, a notary public in and for said
County and State, personally appeared Gary Luttrell, known to me to be the
person whose name is subscribed to the foregoing instrument, and he duly
acknowledged to me that he executed the same for the purpose therein
mentioned.
IN WITNESS WHEREOF, I have set my hand and offered by official seal in
said County and State the day and year in this Certificate first above
written.
/s/ Susan Dupuis
----------------
Notary Public
EXHIBIT 3(i)(2)
CERTIFICATE OF INCORPORATION
OF
FAMOUS FIXINS HOLDING COMPANY, INC.
Under Section 402 of the Business Corporation Law
The undersigned, being a natural person of at least 18 years of age
and acting as the incorporator of the corporation hereby being formed under the
Business Corporation Law, certifies that:
FIRST: The name of the corporation is FAMOUS FIXINS HOLDING
COMPANY, INC.
SECOND: The corporation is formed for the following purpose or
purposes:
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell, import,
export, license as licensor or licensee, lease as lessor or lessee, distribute,
job, enter into, negotiate, execute, acquire, and assign contracts in respect
of, acquire, receive, grant, and assign licensing arrangements, options,
franchises, and other rights in respect of, and generally deal in and with, at
wholesale and retail, as principal, and as sales, business, special, or general
agent, representative, broker, factor, merchant, distributor, jobber, advisor,
and in any other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished, processed, and other real, personal, and mixed
property of any and all kinds, together with the components, resultants, and
by-products thereof; to acquire by purchase or otherwise own, hold, lease,
mortgage, sell, or otherwise dispose of, erect, construct, make, alter,
enlarge, improve, and to aid or subscribe toward the construction, acquisition,
or improvement of any factories, shops, storehouses, buildings, and commercial
and retail establishments of every character, including all equipment,
fixtures, machinery, implements, and supplies necessary, or incidental to, or
connected with, any of the purposes or business of the corporation; and
generally to perform any and all acts connected therewith or arising therefrom
or incidental thereto, and all acts proper or necessary for the purpose of the
business.
To engage generally in the real estate business as principal, agent,
broker, and in any lawful capacity, and generally to take, lease, purchase, or
otherwise acquire, and to own, use, hold, sell, convey, exchange, lease,
mortgage, work, clear, improve, develop, divide, and otherwise handle, manage,
operate, deal in, and dispose of real estate, real property, lands, multiple-
dwelling structures, houses, buildings, and other works, and any interest or
right therein; to take, lease, purchase, or otherwise acquire, and to own, use,
hold,sell, convey, exchange, hire, lease, pledge, mortgage, and, otherwise
handle, and deal in and dispose of, as principal, agent, broker, and in any
unlawful capacity, such personal property, chattels, chattels real, rights,
easements, privileges, choses in action, notes, bonds, mortgages, and
securities as may lawfully be acquired, held, or disposed of; and to acquire,
purchase, sell, assign, transfer, dispose of, and generally deal in and with,
as principal, agent, broker, and in any lawful capacity, mortgages and other
interests in real, personal, and mixed properties; to carry on a general
construction, contracting, building, and realty management business as
principal, agent, representative, contractor, subcontractor, and in any other
lawful capacity.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under, and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and in any manner deal with and contract with reference
to:
(a) inventions, devices, formulae, processes, and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade symbols, and other
indications of origin and ownership granted by or recognized under the laws of
the United States of America or any state or subdivision thereof, or of any
foreign country or subdivision thereof, and all rights connected therewith or
appertaining thereunto;
(c) franchises licenses, grants, and concessions.
To engage in any lawful act or activity for which corporations may
be organized under the Business Corporation Law, provided that the corporation
is not formed to engage in any act or activity requiring the consent or
approval of any state official, department, board, agency, or other body
without such consent or approval first being obtained.
To have in furtherance of the corporate purposes, all of the powers
conferred upon corporations organized under the Business Corporation Law
subject to any limitations thereof contained in this certificate of
incorporation or in the laws of the State of New York.
THIRD: The office the corporation is to be located in the
County of New York, State of New York.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is twenty five million, all of which are of
a par value of one mill each, and all of which are of the same class.
FIFTH: The Secretary of State is designated as the agent of
the corporation upon whom process against the corporation may be served. The
post office address within the State of New York to which the Secretary of
State shall mail a copy of any process against the corporation served upon him
is: c/o Corporation Service Company, 80 State Street, Albany, New York
12207-2543.
SIXTH: The name and the address within the State of New York of
the registered agent of the corporation are as follows:
Corporation Service Company 80 State Street
Albany, New York 12207-2543
Said registered agent is to be the agent of the corporation upon
whom or upon which process against the corporation may be served.
SEVENTH: The duration of the corporation is to be perpetual.
EIGHTH: The corporation shall, to the fullest extent permitted
by Article 7 of the Business Corporation Law, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have the power to
indemnify under said Article from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said Article, and
the indemnification provided for herein shall not be deemed exclusive of any
other rights to which any person may be entitled under any By-Law, resolution
of shareholders, resolution of directors, agreement, or otherwise, as permitted
by said Article, as to action in any capacity in which he served at the
request of the corporation.
NINTH: The personal liability of the directors of the
corporation is eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the Business Corporation Law, as the same may
be amended and supplemented.
TENTH: Whenever under the provisions of the Business
Corporation Law shareholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent, signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted, in accordance
with the provisions of Section 615 of the Business Corporation Law.
Date: June 17, 1998
/s/ John S. Hoenigmann
--------------------------------
John S. Hoenigmann, Incorporator
375 Hudson Street, 11th Floor
New York, New York 10014
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the date hereinafter set forth, before me came John Hoenigmann,
to me known to be the individual who is described in, and who signed the
foregoing certificate of incorporation, and he acknowledged to me that he
signed the same.
Signed on June 17, 1998.
/s/ Sharnik Rice
-------------------------------
Notary Public
EXHIBIT 3(i)(3)
ARTICLES OF MERGER
These Articles of Merger for FAMOUS FIXINS, INC., a Nevada corporation,
are hereby respectively submitted for filing by the Nevada Secretary of State
as required under Section 92A.190 of the Nevada Mergers and Exchanges of
Interest.
1. An Agreement and Plan of Merger was entered into on September 3,
1998 by the following:
Constituent Corporation: FAMOUS FIXINS, INC., a Nevada corporation
Surviving Corporation: FAMOUS FIXINS HOLDING COMPANY, INC.,
a New York corporation
2. An Agreement and Plan of Merger was adopted by the Board of
Directors of FAMOUS FIXINS HOLDING COMPANY, INC. and FAMOUS FIXINS, INC. on
September 3, 1998.
3. Approval of the Agreement and Plan of Merger was required by both
the shareholders of FAMOUS FIXINS HOLDING COMPANY, INC. and FAMOUS FIXINS, INC.
Notice to the shareholders of FAMOUS FIXINS, INC. and FAMOUS FIXINS HOLDING
COMPANY, INC., and the related Agreement and Plan of Merger was submitted to
the shareholders of the respective corporations on or about August 17, 1998 for
meetings held on September 3, 1998.
4. The desgination and number of votes entitled to be cast by each
class of FAMOUS FIXINS, INC., a Nevada corporation, are: common stock, total
authorized 25,000,000 shares, par value $.001 per share, 6,633,891 shares
issued and outstanding. The total number of votes cast for and against the
plan are 4,819,494 and 0, respectively.
5. The desgination and number of votes entitled to be cast by each
class of FAMOUS FIXINS HOLDING COMPANY, INC., a New York corporation, are:
common stock, total authorized 25,000,000 shares, par value $.001 per share, 1
share issued and outstanding. The total number of votes cast for and against
the plan are one (1) and none (0), respectively.
6. The Agreement and Plan of Merger is not set forth herein. A copy
of the Agreement and Plan of Merger is on file at the registered office of the
surviving corporation, and will be furnished by the surviving corporation, on
request and without cost, to any owner of any entity which is a party to the
merger.
IN WITNESS WHEREOF, these Articles of Merger have been executed by FAMOUS
FIXINS, INC. and FAMOUS FIXINS HOLDING COMPANY, INC.
ATTEST FAMOUS FIXINS, INC.
/s/ Peter Zorich By: /s/ Jason Bauer
- ------------------------- ------------------------
Peter Zorich, Secretary Jason Bauer, President
ATTEST FAMOUS FIXINS HOLDING COMPANY, INC.
/s/ Peter Zorich By: /s/ Jason Bauer
- ------------------------- ------------------------
Peter Zorich, Secretary Jason Bauer, President
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this 30th day of November, 1998, before me the undersigned officer,
personally appeared JASON BAUER known to me to be the PRESIDENT of FAMOUS
FIXINS, INC. and acknowledged that he, as an officer being duly authorized so
to do, executed the foregoing instrument for the purposes therein contained, by
signed the name of the corporation by himself as an officer.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
/s/ Stephen A. Saltzman
------------------------
Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this 30th day of November, 1998, before me the undersigned officer,
personally appeared JASON BAUER known to me to be the PRESIDENT of FAMOUS
FIXINS HOLDING COMPANY, INC. and acknowledged that he, as an officer being duly
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signed the name of the corporation by himself as an officer.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
/s/ Stephen A. Saltzman
------------------------
Notary Public
FORWARDING ADDRES FOR SERVICE OF PROCESS IS:
c/o Famous Fixins, Inc.
250 West 57th Street, Suite 2501
New York, NY 10107
EXHIBIT 3(i)(4)
CERTIFICATE OF MERGER
OF
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
AND
FAMOUS FIXINS, INC.
(a Nevada corporation)
INTO
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
UNDER SECTION 904 OF THE BUSINESS CORPORATION LAW
We, the undersigned, Jason Bauer and Peter Zorich, being respectively the
Chairman of the Board and the Secretary of FAMOUS FIXINS HOLDING COMPANY, INC.,
a New York corporation, and Jason Bauer and Peter Zorich, being respectively
the Chairman of the Board and the Secretary of FAMOUS FIXINS, INC., a Nevada
corporation, hereby certify:
1. The name of each constituent corporation is as follows:
FAMOUS FIXINS HOLDING COMPANY, INC., a New York Corporation, and
FAMOUS FIXINS, INC., a Nevada corporation.
The name under which FAMOUS FIXINS, INC. was formed is Spectrum
Resources, Inc.
2. The name of the surviving corporation is FAMOUS FIXINS HOLDING
COMPANY, INC.
3. As to FAMOUS FIXINS HOLDING COMPANY, INC., the designation and
number of outstanding shares of each class and series is: common stock, par
value $.001 per share, of which 1 share is outstanding. The classes and series
entitled to vote is: common stock, par value $.001 per share.
As to FAMOUS FIXINS, INC., the designation and number of
outstanding shares of each class and series is: common stock, par value $.001
per share, of which 6,633,891 shares are outstanding. The classes and series
entitled to vote is: common stock, par value $.001 per share.
4. The certificate of incorporation of FAMOUS FIXINS HOLDING COMPANY,
INC. was filed with the Department of State of the State of New York is the
19th day of June, 1998.
5. The jurisdiction of incorporation of FAMOUS FIXINS, INC., formerly
known as Spectrum Resources, Inc., is Nevada.
6. The date of incorporation of FAMOUS FIXINS, INC., formerly known
as Spectrum Resources, Inc., is the 27th day of July, 1995.
7. No application by FAMOUS FIXINS, INC. for authority to do business
in the State of New York was filed by the Department of State.
8. The merger was authorized with respect to FAMOUS FIXINS HOLDING
COMPANY, INC. in the following manner: A plan of merger was adopted by the
board of directors of FAMOUS FIXINS HOLDING COMPANY, INC. without a meeting by
the consent in writing of all the members of the board to the adoption of a
resolution authorizing adoption of the plan. The resolution and written
consents thereto by the board numbers were filed with the minutes of the
proceedings of the board. The board thereupon submitted the plan to a vote of
shareholders. Notice of meeting was given to each shareholder of record as of
August 21, 1998, a record date fixed pursuant to section 604 of the Business
Corporation Law, whether or not entitled to vote. A copy of the plan of merger
accompanied the notice. The plan was adopted at a meeting of shareholders by
vote of the holders of two thirds of all outstanding shares entitled to vote
thereon.
9. FAMOUS FIXINS, INC., the constituent foreign corporation, has
complied with the applicable provisions of the laws of the State of Nevada
under which FAMOUS FIXINS, INC. is incorporated and the merger is permitted
under such laws. The manner in which the merger was authorized in respect to
FAMOUS FIXINS, INC. was by the unanimous written consent of the Board of
Directors and the approval of the majority of the votes of its shareholders.
IN WITNESS WHEREOF, we have signed this certificate on the 3rd day of
September, 1998 and we affirm the statements contained therein as true under
penalties of perjury.
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
By: /s/ Jason Bauer
--------------------------------
Jason Bauer
Chairman of the Board
By: /s/ Peter Zorich
--------------------------------
Peter Zorich
Secretary
FAMOUS FIXINS, INC.
(a Nevada corporation)
By: /s/ Jason Bauer
--------------------------------
Jason Bauer
Chairman of the Board
By: /s/ Peter Zorich
--------------------------------
Peter Zorich
Secretary
EXHIBIT 3(i)(5)
CERTIFICATE OF MERGER
OF
FAMOUS FIXINS, INC.
(a New York corporation)
INTO
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
UNDER SECTION 905 OF THE BUSINESS CORPORATION LAW
The undersigned, Jason Bauer and Peter Zorich, being respectively the
Chairman of the Board and the Secretary of FAMOUS FIXINS HOLDING COMPANY, INC.,
a New York corporation, hereby certify:
1. The name of the corporation to be merged is FAMOUS FIXINS, INC., a
New York corporation.
The name of the surviving corporation is FAMOUS FIXINS HOLDING
COMPANY, INC.
2. The designation and number of outstanding shares of each class of
FAMOUS FIXINS, INC. are: common stock, par value $.001 per share, of which
4,237,039 shares are outstanding.
Of the above shares of FAMOUS FIXINS, INC., the designation and
number of outstanding shares of each class owned by FAMOUS FIXINS HOLDING
COMPANY, INC. are: common stock, par value $.001 per share, of which 4,237,039
shares are outstanding.
3. The date when the certificate of incorporation of FAMOUS FIXINS,
INC., the merging corporation, was filed with the Department of State of the
State of New York is the 29th day of November, 1995, as amended by the
Certificate of Amendment filed with the Secretary of State of New York filed on
January 23, 1998.
The date when the certificate of incorporation of FAMOUS FIXINS
HOLDING COMPANY, INC., the surviving corporation, was filed with the Department
of State is the 19th day of June, 1998.
4. The plan of merger of FAMOUS FIXINS, INC. into FAMOUS FIXINS
HOLDING COMPANY, INC. was adopted by the Board of Directors of FAMOUS FIXINS
HOLDING COMPANY, INC., which is the parent corporation.
IN WITNESS WHEREOF, the undersigned have signed this certificate on the
3rd day of September, 1998 and we affirm the statements contained therein as
true under penalties of perjury.
FAMOUS FIXINS HOLDING COMPANY, INC.
(a New York corporation)
By: /s/ Jason Bauer
--------------------------------
Jason Bauer
Chairman of the Board
By: /s/ Peter Zorich
--------------------------------
Peter Zorich
Secretary
EXHIBIT 3(i)(6)
Certificate of Amendment of the Certificate of Incorporation
Of
FAMOUS FIXINS HOLDING COMPANY, INC.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
1. The name of the corporation is Famous Fixins Holding Company, Inc.
(the "Corporation").
2. The Certificate of Incorporation was filed with the Department of
State on June 19, 1998.
3. The Certificate of Incorporation is hereby amended to effect the
change in corporate name, the change in the address for mailing of process, and
the change of the registered agent, and in order to accomplish the amendments,
the Certificate of Incorporation shall read as follows:
a. Article First, which relates to the name of the company,
shall read as follows:
"FIRST: The name of the corporation is Famous Fixins, Inc."
b. Article Fifth, which relates to the post address to which the
Secretary of State shall mail a copy of any process against the Corporation
served upon him, shall read as follows:
"FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against the corporation may be served. The
post office address within the State of New York to which the Secretary
of State shall mail a copy of any process against the corporation served
upon him is: c/o the Corporation, 250 West 57th Street, Suite 2501, New
York, New York 10107."
c. Article Sixth, which relates to the name and the address of
the registered agent of the Corporation, shall read as follows:
"SIXTH: Jason Bauer, a natural person, having a business office at
Famous Fixins, Inc., 250 West 57th Street, Suite 2501, New York, New York
10107, is hereby designated the registered agent upon whom process
against this corporation may be served."
4. The above amendments to the Certificate of Incorporation were
authorized by vote of the board, followed by vote of the holders of a majority
of all outstanding shares entitled to vote thereon at a meeting of
shareholders.
IN WITNESS WHEREOF, Jason Bauer, President, and Peter Zorich, Secretary
have subscribed this document on the date set forth below and do hereby affirm,
under the penalties of perjury, that the statements contained therein have been
examined by us and are true and correct.
Date: September 3, 1998
FAMOUS FIXINS HOLDING COMPANY, INC.
by: /s/ Jason Bauer
--------------------------------
Jason Bauer, President
by: /s/ Peter Zorich
--------------------------------
Peter Zorich, Secretary
EXHIBIT 3(ii)
BY - LAWS
OF
FAMOUS FIXINGS HOLDING COMPANY, INC.
(a New York corporation)
ARTICLE I
SHAREHOLDERS
1. CERTIFICATES REPRESENTING SHARES. Certificates representing shares
shall set forth thereon the statements prescribed by Section 508, and, where
applicable, by Sections 505, 616, 620, 709, and 1002, of the Business
Corporation Law and by any other applicable provision of law and shall be
signed by the Chairman or a Vice-Chairman of the Board of Directors, if any,
or by the President or a Vice-President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and may be sealed with
the corporate seal or a facsimile thereof. The signatures of the officers
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation itself
or its employee, or if the shares are listed on a registered national
security exchange. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
its issue.
A certificate representing shares shall not be issued until the full
amount of consideration therefor has been paid except as Section 504 of the
Business Corporation Law may otherwise permit.
The corporation may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost or destroyed,
and the Board of Directors may require the owner of any lost or destroyed
certificate, or his legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may issue certificates
for fractions of a share which shall entitle the holder, in proportion to his
fractional holdings, to exercise voting rights, receive dividends, and
participate in liquidating distributions; or it may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive
such fractions are determined; or it may issue scrip in registered or bearer
form over the manual or facsimile signature of an officer of the corporation
or of its agent, exchangeable as therein provided for full shares, but such
scrip shall not entitle the holder to any rights of a shareholder except as
therein provided.
3. SHARE TRANSFERS. Upon compliance with provisions restricting the
transferability of shares, if any, transfers of shares of the corporation
shall be made only on the share record of the corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a
transfer agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares properly endorsed and the payment of all taxes
due thereon.
4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or the allotment of any rights,
or for the purpose of any other action, the directors may fix, in advance, a
date as the record date for any such determination of shareholders. Such
date shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. If no
record date is fixed, the record date for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of the business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any purpose other than that
specified in the preceding clause shall be at the close of business on the
day on which the resolution of the directors relating thereto is adopted.
When a determination of shareholders of record entitled to notice of or to
vote at any meeting of shareholders has been made as provided in this
paragraph, such determination shall apply to any adjournment thereof, unless
directors fix a new record date under this paragraph for the adjourned
meeting.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of shareholders or a waiver thereof or to participate
or vote thereat or to consent or dissent in writing in lieu of a meeting, as
the case may be, the term "share" or "shares" or "shareholder" or
"shareholders" refers to an outstanding share or shares and to a holder or
holders of record of outstanding shares when the corporation is authorized to
issue only one class of shares, and said reference is also intended to
include any outstanding share or shares and any holder or holders of record
of outstanding shares of any class upon which or upon whom the Certificate of
Incorporation confers such rights where there are two or more classes or
series of shares or upon which or upon whom the Business Corporation Law
confers such rights notwithstanding that the Certificate of Incorporation may
provide for more than one class or series of shares, one or more of which are
limited or denied such rights thereunder.
6. SHAREHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date fixed, from time
to time, by the directors, provided, that the first annual meeting shall be
held on a date within thirteen months after the formation of the corporation,
and each successive annual meeting shall be held on a date within thirteen
months after the date of the preceding annual meeting. A special meeting
shall be held on the date fixed by the directors except when the Business
Corporation Law confers the right to fix the date upon shareholders.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of New York, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, or,
whenever shareholders entitled to call a special meeting shall call the same,
the meeting shall be held at the office of the corporation in the State of
New York.
- CALL. Annual meetings may be called by the directors or by any
officer instructed by the directors to call the meeting. Special meetings
may be called in like manner except when the directors are required by the
Business Corporation Law to call a meeting, or except when the shareholders
are entitled by said Law to demand the call of a meeting.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice of
all meetings shall be given, stating the place, date, and hour of the
meeting, and, unless it is an annual meeting, indicating that it is being
issued by or at the direction of the person or persons calling the meeting.
The notice of an annual meeting shall state that the meeting is called for
the election of directors and for the transaction of other business which may
properly come before the meeting, and shall (if any other action which could
be taken at a special meeting is to be taken at such annual meeting) state
the purpose or purposes. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is called; and,
at any such meeting, only such business may be transacted which is related to
the purpose or purposes set forth in the notice. If the directors shall
adopt, amend, or repeal a By-Law regulating an impending election of
directors, the notice of the next meeting for election of directors shall
contain the statements prescribed by Section 601(b) of the Business
Corporation Law. If any action is proposed to be taken which would, if
taken, entitle shareholders to receive payment for their shares, the notice
shall include a statement of that purpose and to that effect and shall be
accompanied by a copy of Section 623 of the Business Corporation Law or an
outline of its material terms. A copy of the notice of any meeting shall be
given, personally or by first class mail, not fewer than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, to each shareholder at his
record address or at such other address which he may have furnished by
request in writing to the Secretary of the corporation. In lieu of giving a
copy of such notice personally or by first class mail as aforesaid, a copy of
such notice may be given by third class mail not fewer than twenty-four nor
more than sixty days before the date of the meeting. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid, in a post
office or official depository under the exclusive care and custody of the
United States post office department. If a meeting is adjourned to another
time or place, and, if any announcement of the adjourned time or place is
made at the meeting, it shall not be necessary to give notice of the
adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice of a meeting need not be given to any
shareholder who submits a signed waiver of notice before or after the
meeting. The attendance of a shareholder at a meeting without protesting
prior to the conclusion of the meeting the lack of notice of such meeting
shall constitute a waiver of notice by him.
- SHAREHOLDER LIST AND CHALLENGE. A list of shareholders as of the
record date, certified by the Secretary or other officer responsible for its
preparation or by the transfer agent, if any, shall be produced at any
meeting of shareholders upon the request thereat or prior thereto of any
shareholder. If the right to vote at any meeting is challenged, the
inspectors of election, if any, or the person presiding thereat, shall
require such list of shareholders to be produced as evidence of the right of
the persons challenged to vote at such meeting, and all persons who appear
from such list to be shareholders entitled to vote thereat may vote at such
meeting.
- CONDUCT OF MEETING. Meetings of the shareholders shall be presided
over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the shareholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the chairman of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every shareholder may authorize another person
or persons to act for him by proxy in all matters in which a shareholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a
meeting. No proxy shall be valid after the expiration of eleven months from
the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by the Business Corporation Law.
- INSPECTORS - APPOINTMENT. Inspectors may be appointed in the manner
prescribed by the provisions of Section 610 of the Business Corporation Law,
but need not be appointed except as otherwise required by those provisions.
- QUORUM. Except for a special election of directors pursuant to
Section 603(b) of the Business Corporation Law, and except as herein
otherwise provided, the holders of a majority of the votes of outstanding
shares shall constitute a quorum at a meeting of shareholders for the
transaction of any business. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
- VOTING. Each share shall entitle the holder thereof to one vote. In
the election of directors, a plurality of the votes cast shall elect. Any
other action shall be authorized by a majority of the votes cast in favor of
or against such action except where the Business Corporation Law provides
otherwise.
7. SHAREHOLDER ACTION WITHOUT MEETINGS. Whenever under the provisions
of the Business Corporation Law shareholders are required or permitted to
take any action by vote, such action may be taken without a meeting on
written consent, signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted, in accordance with the provisions of Section 615 of the
Business Corporation Law.
ARTICLE II
GOVERNING BOARD
1. FUNCTIONS AND DEFINITIONS. The business of the corporation shall
be managed under the direction of a governing board, which is herein referred
to as the "Board of Directors" or "directors" notwithstanding that the
members thereof may otherwise bear the titles of trustees, managers, or
governors or any other designated title, and notwithstanding that only one
director legally constitutes the Board. The word "director" or "directors"
likewise herein refers to a member or to members of the governing board
notwithstanding the designation of a different official title or titles. The
use of the phrase "entire board" herein refers to the total number of
directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be at least
eighteen years of age. A director need not be a shareholder, a citizen of
the United States, or a resident of the State of New York. The initial Board
of Directors shall consist of one person. Thereafter, the number of
directors constituting the board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the shareholders or of the
directors, or, if the number is not so fixed, the number shall be one. The
number of directors may be increased or decreased by action of shareholders
or of the directors, provided that any action of the directors to effect such
increase or decrease shall require the vote of a majority of the entire
Board. No decrease shall shorten the term of any incumbent director.
3. ELECTION AND TERM. The first Board of Directors shall be elected
by the incorporator or incorporators and shall hold office until the first
annual meeting of shareholders and until their successors have been elected
and qualified. Thereafter, directors who are elected at an annual meeting of
shareholders, and directors who are elected in the interim by the
shareholders to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of shareholders and until their
successors have been elected and qualified; and directors who are elected in
the interim by the directors to fill vacancies and newly created
directorships shall hold office until the next meeting of shareholders at
which the election of directors is in the regular order of business and until
their successors have been elected and qualified. In the interim between
annual meetings of shareholders or of special meetings of shareholders called
for the election of directors, newly created directorships and any vacancies
in the Board of Directors, including vacancies resulting from the removal of
directors for cause or without cause, may be filled by the vote of the
remaining directors then in office, although less than a quorum exists.
4. MEETING
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of New York as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, of the President, or of a
majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. The notice of any meeting need not specify the purpose of
the meeting. Any requirement of furnishing a notice shall be waived by any
director who signs a waiver of notice before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to him.
- QUORUM AND ACTION. A majority of the entire Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided such
majority shall constitute at least one-third of the entire Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, the
act of the Board shall be the act, at a meeting duly assembled, by vote of a
majority of the directors present at the time of the vote, a quorum being
present at such time.
Any one or more members of the Board of Directors or of any committee
thereof may participate in a meeting of said Board or of any such committee
by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the
same time, and participation by such means shall constitute presence in
person at the meeting.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the President,
if present and acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed
for cause or without cause by the shareholders. One or more of the directors
may be removed for cause by the Board of Directors.
6. COMMITTEES. The Board of Directors, by resolution adopted by a
majority of the entire Board of Directors, may designate from their number
one or more directors to constitute an Executive Committee and other
committees, each of which, to the extent provided in the resolution
designating it, shall have the authority of the Board of Directors with the
exception of any authority the delegation of which is prohibited by Section
712 of the Business Corporation Law.
7. WRITTEN ACTION. Any action required or permitted to be taken by
the Board of Directors or by any committee thereof may be taken without a
meeting if all of the members of the Board of Directors or of any committee
thereof consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents thereto by the members of
the Board of Directors or of any such committee shall be filed with the
minutes of the proceedings of the Board of Directors or of any such
committee.
ARTICLE III
OFFICERS
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice-Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and
such other officers as they may determine. The President may but need not be
a director. Any two or more offices may be held by the same person. When
all of the issued and outstanding shares of the corporation are owned by one
person, such person may hold all or any combination of offices.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of shareholders and until his successor has
been elected or appointed and qualified.
Officers shall have the power and duties defined in the resolutions
appointing them.
The Board of Directors may remove any officer for cause or without
cause.
ARTICLE IV
STATUTORY NOTICES TO SHAREHOLDERS
The directors may appoint the Treasurer or other fiscal officer and/or
the Secretary or any other officer to cause to be prepared and furnished to
the shareholders entitled thereto any special financial notice and/or any
financial statement, as the case may be, which may be required by any
provision of law, and which, more specifically, may be required by Sections
511, 515, 516, 517, 519, and 520 of the Business Corporation Law.
ARTICLE V
BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of the shareholders, of the
Board of Directors, and/of any committee which the directors may appoint, and
shall keep at the office of the corporation in the State of New York or at
the office of the transfer agent or registrar, if any, in said State, a
record containing the names and addresses of all shareholders, the number and
class of shares held by each, and the dates when they respectively became the
owners of record thereof. Any of the foregoing books, minutes, or records
may be in written form or in any other form capable of being converted into
written form within reasonable time.
ARTICLE VI
CORPORATE SEAL
The corporate seal, if any, shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change from time to time, by the Board of Directors.
ARTICLE VIII
CONTROL OVER BY-LAWS
The shareholders entitled to vote in the election of directors or the
directors upon compliance with any statutory requisite may amend or repeal
the By-Laws and may adopt new By-Laws, except that the directors may not
amend or repeal any By-Law or adopt any new By-Law, the statutory control
over which is vested exclusively in the said shareholders or in the
incorporators. By-Laws adopted by the incorporators or directors may be
amended or repealed by the said shareholders.
**********
The undersigned incorporator certifies that he has examined the
foregoing By-Laws and has adopted the same as the first By-Laws of the
corporation; that said By-Laws contain specific and general provisions,
which, in order to be operative, must be adopted by the incorporator or
incorporators or the shareholders entitled to vote in the election of
directors; and that he has adopted each of said specific and general
provisions in accordance with the requirements of the Business Corporation
Law.
Dated: June 19, 1998
/s/ John S. Hoenigmann
--------------------------------------
John S. Hoenigmann, Incorporator
FAMOUS FIXINGS HOLDING COMPANY, INC.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the By-Laws of FAMOUS FIXINGS HOLDING COMPANY, INC., a New York
corporation, as in effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: June 19, 1998
/s/ Peter Zorich
--------------------------------------
Secretary of
FAMOUS FIXINGS HOLDING COMPANY, INC.
(SEAL)
EXHIBIT 4.1
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO: (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT; (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER
SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES); OR (iii) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M. NEW YORK TIME, ______ __, ____
NO. W-__ _______ Warrants
This is to certify that, FOR VALUE RECEIVED, _____________ or his
registered assigns (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from FAMOUS FIXINS, INC., a Nevada corporation
(the "Company"), a total of ________ shares of the Company's common stock,
par value $____ per share (the "Shares" or "Warrant Securities"), at the
purchase price of $____ per share (the "Exercise Price"). This Warrant is
issued to the Holder in exchange for all of the Holder's warrants to purchase
an aggregate of _____ shares of common stock, at an exercise price of $____
per share, of Famous Fixins, Inc., a New York corporation.
(a) Exercise of Warrant. This Warrant may be exercised in whole or
in part at any time or from time to time, but not later than 5:30 PM, New
York time, on _______ __, ____ (the "Expiration Date"), or if said day is a
day on which banking institutions are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer agent,
if any, with the Purchase Form annexed hereto duly executed, together with
all Federal and state taxes applicable upon such exercise, if any. Upon
receipt by the Company of this Warrant at the office or the agency of the
Company, in proper form for exercise, the Holder shall be deemed to be the
Holder of record of the Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Shares shall not then be actually delivered to
the Holder.
(b) Redemption. Prior to the Expiration Date, the Warrant shall be
redeemable, under the circumstances described below at the discretion of the
Company for $___ per underlying share (the "Redemption Fee"). The Company's
right to redemption shall be exercisable commencing upon the day following
the thirtieth consecutive business day during which the Company's common
stock has traded at prices in excess of $____ per share with weekly volume of
such trading being in excess of the total number of shares represented by
this Warrant. In the event the Company exercises its right to redeem the
Warrants, the Company shall give the Holder written notice of such decision.
In the event that the Company does not receive the Warrant from the Holder
within 60 days from the date on the notice to the Holder of the Company's
intention to redeem the Warrant, then the Warrant shall be deemed cancelled,
and the Holder shall not be entitled to the Redemption Fee.
(c) Reservation of Shares. The Company hereby agrees that, during
the time period the Warrant is exercisable, there shall be reserved for
issuance and/or delivery upon exercise of this Warrant such number of shares
of its common stock as shall be required for issuance or delivery upon
exercise of this Warrant.
(d) Fractional Shares. With respect to any fraction of a Share
called for upon any exercise hereof, the Holder agrees to waive the Holder's
right to such fractional Shares. As such, no fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant.
(e) Exchange, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the discretion of the Holder, upon
presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, for other Warrants of different denominations
entitling the Holder thereof to purchase in the aggregate the same number of
Shares exercisable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and with funds sufficient to pay any transfer tax, if any; whereupon, the
Company, shall execute and shall deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. The term "Warrant" as used herein includes any
Warrants issued in substitution for or replacement of this Warrant or into
which this Warrant may be divided or exchanged. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction, or mutilation
of this Warrant, and (in the case of loss, theft, destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and will deliver a new
Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone.
(f) Rights of the Holder. The Holder, by virtue hereof, shall not be
entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(g) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised; during the time period that the Warrant is
exercisable and (i) if the Company shall offer to the Holders for
subscription or purchase by them any shares of stock of any class or any
other rights, or (ii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger
of the Company with or into another corporation, sale, lease or transfer of
all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation, or winding
up of the Company shall be effected, then, in any such case, the Company
shall cause to be delivered to the Holder, at least ten (10) days prior to
the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such offering or rights,
or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation, or winding up is to take place
and the date, if any, is to be fixed, as of which the holders of record shall
be entitled to exchange their Shares for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation, or winding up.
(h) Reclassification, Reorganization or Merger. If, during the time
period that the Warrant is exercisable, there is any reclassification,
capital reorganization, or other change of outstanding Shares of the Company
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of an issuance of Shares by way of
dividend or other distribution or of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary, in which merger the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization, or other change of outstanding
Stock of the class issuable upon exercise of this Warrant), or in case of any
sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares and/or other securities and property receivable upon such
reclassification; capital reorganization; or other change, consolidation,
merger, sale, or conveyance as maybe issued or payable with respect to or in
exchange for the number of Shares of the Company theretofore purchasable upon
the exercise of this Warrant had such recapitalization; capital
reorganization; or other change, consolidation, merger, sale or conveyance
not taken place. Any such provisions shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (h)
shall similarly apply to successive reclassification; capital
reorganizations; changes of Shares; and to successive consolidations,
mergers, sales, or conveyances.
In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares shall be issued in exchange, conversion, substitution or payment, in
whole or in part, for a security of the Company other than Stock, any such
issue shall be treated as an issue of Shares with the amount of the
consideration received upon the issue thereof being determined by the Board
of Directors of the Company, such determination to be final and binding on
the Holder.
(i) Registration Under the Securities Act of 1933.
(1) In the event of a registered public offering of at least
three million dollars in securities as calculated therein ("PO"), the Company
shall use reasonable efforts to file a registration statement under the Act
which shall include the Warrant Securities within ten months of the effective
date of the PO. The Company shall bear the expenses of such registration,
including but not limited to legal, accounting and printing fees; provided,
however, that in no event shall the Company be obligated to pay (A) any fees
and disbursements of special counsel for the holders of the Warrants or the
Shares, or (B) any underwriters' discount or commission in respect of such
Warrants or Shares.
(2) In addition to the rights above provided, the Company will
cooperate with the Holder(s) of the Warrants and Shares issued upon the
exercise of the Warrants in preparing and in signing any Registration Statement
required in order to sell or to transfer the aforesaid Shares.
(3) The Company and the holders of the Warrants and Shares will
cooperate with each other in the preparation and the filing to establish that
any proposed disposition by such holders is exempt under the Act. The
holders will indemnify and will hold the Company and its officers, directors
and controlling persons harmless from and against all losses, damages,
expenses and liabilities based upon or arising out of or in connection with
the investigation of any untrue statement of a material fact contained in any
such Registration Statement or any applicable Prospectus, Offering Circular,
amendment or supplement thereto, or arising out of or based upon or in
connection with the investigation of an omission to state a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, to the extent
that such untrue statement or omission was made by the Company or by its
officers and directors in reliance upon information furnished by such owner.
The Company will indemnify and will hold each of such owner and each person,
if any, who controls such owner harmless from and against all losses,
damages, expenses and liabilities based upon or arising out of or in
connection with the investigation of any untrue statement of a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, but only to
the extent that such untrue statement or omission was not made by the Company
or by its officers or directors upon information furnished by such owner.
Prior to the effective date of any such Registration Statement or
Notification, the Company and each owner of Warrants or Warrant Securities
shall enter into reciprocal indemnification agreements as herein contemplated
substantially in the form customarily used by reputable investment bankers.
(j) Transfer to Comply with the Securities Act of 1933.
(1) This Warrant or the Warrant Securities or any other
securities issued or issuable upon exercise of this Warrant may not be sold,
transferred, or otherwise disposed of except to a person who, in the opinion
of counsel for the Company, is a person to whom this Warrant or such Warrant
Securities may legally be transferred pursuant to Section (e) hereof without
registration and without the delivery of a current Prospectus under the Act
with respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section (i) with respect to any
resale or other disposition of such securities.
(2) The Company may cause the following legend or one similar
thereto to be set forth on each certificate representing Warrant Securities
or any other security issued or issuable upon exercise of this Warrant,
unless counsel for the Company is of the opinion as to any such certificate
that such legend is unnecessary:
The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act") and are
restricted securities" as that term is defined in Rule 144 under the
Act. The shares may not be offered for sale, sold, or otherwise
transferred except pursuant to an effective registration statement
under the Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the satisfaction
of the Company.
(3) Applicable Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of the Company's corporate
domicile.
Dated: ___________ __, ____
FAMOUS FIXINS, INC.
By:
-----------------------
Jason Bauer, President
ATTEST:
By:
-----------------------
Peter Zorich, Secretary
<PAGE>
EXHIBIT A
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of common stock
in accordance with the terms of that Certain Warrant Certificate No. _____.
The undersigned requests that a certificate for such securities be registered
in the name of ________________________________________ whose address is
________________________________________________________________ and that
such Certificate be delivered to __________________________________________
whose address is ______________________________________________.
Dated:_____________________________
Signature______________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
Social Security________________________________________________
(or Other Identifying Number of Holder)
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
(To be completed and executed by the holder of the Warrant to
which this exhibit is attached to transfer the Warrant.)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
Name:______________________________________________________________
(Please type, write or print in block letters)
Address:_____________________________________________________________
whose taxpayer identification number is _____________________________
the right to purchase the Common Stock represented by this Warrant (warrant
certificate number W-____) to the extent of ____________________ shares as to
which such right is exercisable and does hereby irrevocably constitute and
appoint____________________________________ attorney, to transfer the same on
the books of the Company with full power of substitution.
Dated: ________________________
_________________________________________________________
NOTE: The above signature must correspond with the name as written
upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
_________________________________________________
_________________________________________________
(Address of Warrant Holder)
Signature guaranteed by _______________________________________________
EXHIBIT 4.2
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO: (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT; (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER
SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES); OR (iii) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M. NEW YORK TIME, JUNE 2, 2004
NO. W-6 300,000 Warrants
This is to certify that, FOR VALUE RECEIVED, MICHAEL SIMON, or his
registered assigns (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from FAMOUS FIXINS INC., a Nevada corporation
(the "Company"), a total of 300,000 shares of the Company's common stock,
$.001 par value per share (the "Shares" or "Warrant Securities") at the
purchase price of $1.00 per share (the "Exercise Price").
This Warrant is subject to certain conditions of continued employment
of the Holder by the Company. The Holder is entitled to exercise this
Warrant as follows: the Holder may exercise this Warrant after June 2, 1999,
to purchase up to 60,000 shares; after June 2, 2000, to purchase up to an
additional 60,000 shares; after June 2, 2001, to purchase an additional
60,000 shares; after June 2, 2002, to purchase an additional 60,000 shares;
and, after June 2, 2003, to purchase an additional 60,000 shares. In the
event the Holder's employment with the Company is terminated, at any time,
for whatever reason, all unexercised warrants and rights to such warrants, as
of the date of termination, shall be forfeited.
(a) Exercise of Warrant. This Warrant may be exercised in whole or
in part at any time or from time to time, but not later than 5:30 PM, New
York time, on June 2, 2004 (the "Expiration Date"), or if said day is a day
on which banking institutions are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer agent,
if any, with the Purchase Form or Cashless Exercise Form annexed hereto duly
executed, together with all Federal and state taxes applicable upon such
exercise, if any. Upon receipt by the Company of this Warrant at the office
or the agency of the Company, in proper form for exercise, the Holder shall
be deemed to be the Holder of record of the Shares issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such Shares shall not then
be actually delivered to the Holder.
In order to exercise this Warrant, the Warrant Holder shall deliver on
the Exercise Date to the Company at its principal office or such other office
or agency designated by it for such purpose, this Warrant, accompanied by
either:
(1) the Purchase Form attached hereto setting forth the Holder's
election to exercise this Warrant, which notice shall specify the number of
Shares being purchased, accompanied by cash or a certified or bank check
payable to the order of the Company or wire transfer in an amount equal to
the Exercise Price of the number of Shares being purchased; or
(2) the Cashless Exercise Form attached hereto duly executed by the
Warrant Holder (such exercise being referred to herein as a "Cashless
Exercise") setting forth such Holder's election to receive the number of
Shares specified in the Cashless Exercise Form. Such presentation and
surrender shall be deemed a waiver of the Holder's obligation to pay all or
any portion of the Exercise Price in cash. In the event of a Cashless
Exercise, the Holder hereof shall exchange this Warrant for that number of
Shares determined by multiplying the number of Shares for which the Holder
desires to exercise this Warrant by a fraction, the numerator of which shall
be the result (but not less than zero) obtained by subtracting the Exercise
Price then in effect from the current market price per share (the "Current
Market Price") of the Shares as of the exercise date, and the denominator of
which shall be such Current Market Price. For purposes of any computation
under this Section (a)(2) hereof, the Current Market Price of Share as of any
date shall be deemed to be the average for the thirty (30) consecutive
business days immediately prior to such exercise date of the daily closing
prices of the Share on the principal national or regional securities exchange
on which the Share is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, the closing prices as reported by
the Nasdaq National or SmallCap Markets, or if not then listed on the Nasdaq
National or SmallCap Markets, the average of the highest reported bid and
lowest reported asked prices as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or if not
then publicly traded, the fair market value of the Common Stock as determined
by the Board of Directors of Company;
(b) Issuance of Stock Certificates. Upon receipt of the materials
delivered by the Warrant Holder under this Section, the Company shall, as
promptly as practicable and in any event within five (5) business days
thereafter, execute and deliver, or cause to be executed and delivered, to
the Holder a certificate or certificates representing the aggregate number of
Shares specified in such notice or form together with cash in lieu of any
fractional share as hereinafter provided. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified
in such notice or form and shall be registered in the name of the Holder or
such other name as shall be designated (together with an address) in such
notice or form. Such certificate(s) shall be deemed to have been issued and
the Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such Shares as of the exercise
date. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of such certificate or certificates, deliver
to the Holder a new Warrant evidencing the rights of the holder to purchase
the remaining Shares called for by this Warrant, which new Warrant shall in
all other respects, be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same
returned to such holder. The Company shall pay all expenses and other
charges payable in connection with the preparation, issuance and delivery of
share certificates under this Section except that, in the case such share
certificates shall be registered in a name or names other than the name of
the Holder, funds sufficient to pay all share transfer taxes which shall be
payable upon issuance of such share certificate or certificates shall be paid
by the Holder at the time the notice of exercise hereinabove is delivered to
the Company.
(c) Warrant Securities Fully Paid. All Warrant Securities shall be,
when issued, duly authorized, validly issued and non-assessable.
(d) Redemption. Prior to the Expiration Date, the Warrant shall be
redeemable, under the circumstances described below at the discretion of the
Company for $.1O per underlying share (the "Redemption Fee"). The Company's
right to redemption shall be exercisable commencing upon the day following
the thirtieth consecutive business day during which the Company's common
stock has traded at prices in excess of $3.00 per share with weekly volume of
such trading being in excess of the total number of shares represented by
this Warrant. In the event the Company exercises its right to redeem the
Warrants, the Company shall give the Holder written notice of such decision.
In the event that the Holder does not exercise all or any part of the
Warrants or that the Company does not receive the Warrant from the Holder
within 60 days from the date on the notice to the Holder of the Company's
intention to redeem the Warrant, then the Warrant shall be deemed cancelled,
and the Holder shall not be entitled to further exercise thereof or to the
Redemption Fee.
(e) Reservation of Shares. The Company hereby agrees that, during
the time period the Warrant is exercisable, there shall be reserved for
issuance and/or delivery upon exercise of this Warrant such number of shares
of its common stock as shall be required for issuance or delivery upon
exercise of this Warrant.
(f) Fractional Shares. With respect to any fraction of a Share
called for upon any exercise hereof, the Holder agrees to waive the Holder's
right to such fractional Shares. As such, no fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant.
(g) Exchange, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the discretion of the Holder, upon
presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, for other Warrants of different denominations
entitling the Holder thereof to purchase in the aggregate the same number of
Shares exercisable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and with funds sufficient to pay any transfer tax, if any; whereupon, the
Company, shall execute and shall deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. The term "Warrant" as used herein includes any
Warrants issued in substitution for or replacement of this Warrant or into
which this Warrant may be divided or exchanged. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction, or mutilation
of this Warrant, and (in the case of loss, theft, destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and will deliver a new
Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone.
(h) Rights of the Holder. The Holder, by virtue hereof, shall not
be entitled to any rights of a stockholder in the Company, either at law or
in equity, and the rights of the Holder are limited to those expressed in
this Warrant and are not enforceable against the Company except to the extent
set forth herein.
(i) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised; during the time period that the Warrant is
exercisable and (i) if the Company shall offer to the Holders for
subscription or purchase by them any shares of stock of any class or any
other rights, or (ii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger
of the Company with or into another corporation, sale, lease or transfer of
all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation, or winding
up of the Company shall be effected, then, in any such case, the Company
shall cause to be delivered to the Holder, at least ten (10) days prior to
the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such offering or rights,
or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation, or winding up is to take place
and the date, if any, is to be fixed, as of which the holders of record shall
be entitled to exchange their Shares for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation, or winding up.
(j) Reclassification, Reorganization or Merger. If, during the time
period that the Warrant is exercisable, there is any reclassification,
capital reorganization, or other change of outstanding Shares of the Company
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of an issuance of Shares by way of
dividend or other distribution or of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary, in which merger the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization, or other change of outstanding
Stock of the class issuable upon exercise of this Warrant), or in case of any
sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares and/or other securities and property receivable upon such
reclassification; capital reorganization; or other change, consolidation,
merger, sale, or conveyance as maybe issued or payable with respect to or in
exchange for the number of Shares of the Company theretofore purchasable upon
the exercise of this Warrant had such recapitalization; capital
reorganization; or other change, consolidation, merger, sale or conveyance
not taken place. Any such provisions shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (h)
shall similarly apply to successive reclassification; capital
reorganizations; changes of Shares; and to successive consolidations,
mergers, sales, or conveyances.
In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares shall be issued in exchange, conversion, substitution or payment, in
whole or in part, for a security of the Company other than Stock, any such
issue shall be treated as an issue of Shares with the amount of the
consideration received upon the issue thereof being determined by the Board
of Directors of the Company, such determination to be final and binding on
the Holder.
(k) Registration Under the Securities Act of 1933.
(1) In the event of a registered public offering of at least
three million dollars in securities as calculated therein ("PO"), the Company
shall use reasonable efforts to file a registration statement under the Act
which shall include the Warrant Securities within ten months of the effective
date of the PO. The Company shall bear the expenses of such registration,
including but not limited to legal, accounting and printing fees; provided,
however, that in no event shall the Company be obligated to pay (A) any fees
and disbursements of special counsel for the holders of the Warrants or the
Shares, or (B) any underwriters' discount or commission in respect of such
Warrants or Shares.
(2) In addition to the rights above provided, the Company will
cooperate with the Holder(s) of the Warrants and Shares issued upon the
exercise of the Warrants in preparing and in signing any Registration
Statement required in order to sell or to transfer the aforesaid Shares.
(3) The Company and the holders of the Warrants and Shares
will cooperate with each other in the preparation and the filing to establish
that any proposed disposition by such holders is exempt under the Act. The
holders will indemnify and will hold the Company and its officers, directors
and controlling persons harmless from and against all losses, damages,
expenses and liabilities based upon or arising out of or in connection with
the investigation of any untrue statement of a material fact contained in any
such Registration Statement or any applicable Prospectus, Offering Circular,
amendment or supplement thereto, or arising out of or based upon or in
connection with the investigation of an omission to state a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, to the extent
that such untrue statement or omission was made by the Company or by its
officers and directors in reliance upon information furnished by such owner.
The Company will indemnify and will hold each of such owner and each person,
if any, who controls such owner harmless from and against all losses,
damages, expenses and liabilities based upon or arising out of or in
connection with the investigation of any untrue statement of a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, but only to
the extent that such untrue statement or omission was not made by the Company
or by its officers or directors upon information furnished by such owner.
Prior to the effective date of any such Registration Statement or
Notification, the Company and each owner of Warrants or Warrant Securities
shall enter into reciprocal indemnification agreements as herein contemplated
substantially in the form customarily used by reputable investment bankers.
(l) Transfer to Comply with the Securities Act of 1933.
(1) This Warrant or the Warrant Securities or any other
securities issued or issuable upon exercise of this Warrant may not be sold,
transferred, or otherwise disposed of except to a person who, in the opinion
of counsel for the Company, is a person to whom this Warrant or such Warrant
Securities may legally be transferred pursuant to Section (e) hereof without
registration and without the delivery of a current Prospectus under the Act
with respect thereto and then only against receipt of an agreement of such
person to comply with the provisions of this Section (i) with respect to any
resale or other disposition of such securities.
(2) The Company may cause the following legend or one similar
thereto to be set forth on each certificate representing Warrant Securities
or any other security issued or issuable upon exercise of this Warrant,
unless counsel for the Company is of the opinion as to any such certificate
that such legend is unnecessary:
The shares represented by this Certificate have
not been registered under the Securities Act of
1933, as amended (the "Act") and are "restricted
securities" as that term is defined in Rule 144
under the Act. The shares may not be offered for
sale, sold, or otherwise transferred except pursuant
to an effective registration statement under the Act
or pursuant to an exemption from registration under
the Act, the availability of which is to be established
to the satisfaction of the Company.
(3) Applicable Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of the Company's corporate
domicile.
Dated: June 2, 1998
FAMOUS FIXINS, INC.
By: /s/Jason Bauer
-----------------------
Jason Bauer, President
ATTEST:
By: /s/ Peter Zorich
-----------------------
Peter Zorich, Secretary
<PAGE>
EXHIBIT A
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of common stock
in accordance with the terms of that Certain Warrant Certificate No____. The
undersigned requests that a certificate for such securities be registered in
the name of _____________ whose address is _______________________________
and that such Certificate be delivered to ______________ whose address is
________________________________________.
Dated:________________
Signature ____________________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.)
Social Security ____________________________________________
(or Other Identifying Number of Holder)
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
(To be completed and executed by the holder of the Warrant to
which this exhibit is attached to transfer the Warrant.)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
Name:_________________________________________________________________
(Please type, write or print in block letters)
Address:______________________________________________________________
whose taxpayer identification number is_______________________________
the right to purchase the Common Stock represented by this Warrant (warrant
certificate number W-____) to the extent of ______ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
___________________ attorney, to transfer the same on the books of the
Company with full power of substitution.
Dated: ____________, ______
______________________________
NOTE: The above signature must correspond with the name
as written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement or
any change whatever.
___________________________
___________________________
(Address of Warrant Holder)
Signature guaranteed by______________________________
<PAGE>
EXHIBIT C
CASHLESS EXERCISE FORM
(To be executed upon a Cashless Exercise)
The undersigned hereby irrevocably elects to surrender its
Warrant for ____shares of common stock or such lesser number of shares of
common stock as maybe purchased pursuant to the Cashless Exercise provisions
of the within Warrant.
INSTRUCTION FOR REGISTRATION OF STOCK
Name:_____________________________________________________________________
(Please typewrite or print)
Address: _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Signature:________________________________________________________________
Social Security Number:___________________________________________________
And if said number of shares shall not be all the shares
exchangeable or purchasable under the within Warrant, a new Warrant of like
tenor is to be issued in the name of the undersigned for the balance of the
shares purchasable thereunder.
Signature:____________________________
Printed Name:_________________________
Dated:_________________________
EXHIBIT 4.3
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO: (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT; (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER
SUCH ACT RELATING TO THE, DISPOSITION OF SECURITIES); OR (iii) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M. NEW YORK TIME, _______ __, _____
NO. W-___ ________ Warrants
This is to certify that, FOR VALUE RECEIVED, _______________ or his
registered assigns (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from Famous Fixins, Inc., a New York corporation
(the "Company"), a total of ______ shares of the Company's common stock, par
value $.001 per share (the "Shares"), at the purchase price of $___ per share
(the "Exercise Price").
(a) Exercise of Warrant. This Warrant may be exercised in whole or
in part at any time or from time to time, but not later than 5:30 PM, New
York time, on ______ __, ____ (the "Expiration Date"), or if said day is a day
on which banking institutions are authorized by law to close, then on the
next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company or at the office of its stock transfer agent,
if any, with the Purchase Form annexed hereto duly executed, together with
all Federal and state taxes applicable upon such exercise, if any. Upon
receipt by the Company of this Warrant at the office or the agency of the
Company, in proper form for exercise, the Holder shall be deemed to be
the Holder of record of the Shares issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Shares shall not then be
actually delivered to the Holder.
(b) Issuance of Stock Certificates. Upon receipt of the materials
delivered by the Warrant Holder under this Section, the Company shall, as
promptly as practicable and in any event within five (5) business days
thereafter, execute and deliver, or cause to be executed and delivered, to
the Holder a certificate or certificates representing the aggregate number of
Shares specified in such notice or form together with cash in lieu of any
fractional share as hereinafter provided. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified
in such notice or form and shall be registered in the name of the Holder or
such other name as shall be designated (together with an address) in such
notice or form. Such certificate(s) shall be deemed to have been issued and
the Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such Shares as of the exercise
date. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of such certificate or certificates, deliver
to the Holder a new Warrant evidencing the rights of the holder to purchase
the remaining Shares called for by this Warrant, which new Warrant shall in
all other respects, be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same
returned to such holder. The Company shall pay all expenses and other
charges payable in connection with the preparation, issuance and delivery of
share certificates under this Section except that, in the case such share
certificates shall be registered in a name or names other than the name of
the Holder, funds sufficient to pay all share transfer taxes which shall be
payable upon issuance of such share certificate or certificates shall be paid
by the Holder at the time the notice of exercise hereinabove is delivered to
the Company.
(c) Shares Fully Paid. All Shares shall be, when issued, duly
authorized, validly issued and non-assessable.
(d) Redemption. Prior to the Expiration Date, the Warrant shall be
redeemable, under the circumstances described below at the discretion of the
Company for $___ per underlying share (the "Redemption Fee"). The Company's
right to redemption shall be exercisable commencing upon the day following
the thirtieth consecutive business day during which the Company's common
stock has traded at prices in excess of $____ per share with weekly volume of
such trading being in excess of the total number of shares represented by
this Warrant. In the event the Company exercises its right to redeem the
Warrants, the Company shall give the Holder written notice of such decision.
In the event that the Holder does not exercise all or any part of the
Warrants or that the Company does not receive the Warrant from the Holder
within 60 days from the date on the notice to the Holder of the Company's
intention to redeem the Warrant, then the Warrant shall be deemed canceled,
and the Holder shall not be entitled to further exercise thereof or to the
Redemption Fee.
(e) Reservation of Shares. The Company hereby agrees that, during
the time period the Warrant is exercisable, there shall be reserved for
issuance and/or delivery upon exercise of this Warrant such number of shares
of its common stock as shall be required for issuance or delivery upon
exercise of this Warrant.
(f) Fractional Shares. With respect to any fraction of a Share
called for upon any exercise hereof, the Holder agrees to waive the Holder's
right to such fractional Shares. As such, no fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant.
(g) Exchange, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the discretion of the Holder, upon
presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, for other Warrants of different denominations
entitling the Holder thereof to purchase in the aggregate the same number of
Shares exercisable hereunder. Any assignment hereof shall be made by
surrender of this Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and with funds sufficient to pay any transfer tax, if any; whereupon, the
Company, shall execute and shall deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. The term "Warrant" as used herein includes any
Warrants issued in substitution for or replacement of this Warrant or into
which this Warrant may be divided or exchanged. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction, or mutilation
of this Warrant, and (in the case of loss, theft, destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and will deliver a new
Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone.
(h) Rights of the Holder. The Holder, by virtue hereof, shall not
be entitled to any rights of a stockholder in the Company, either at law or
in equity, and the rights of the Holder are limited to those expressed in
this Warrant and are not enforceable against the Company except to the extent
set forth herein.
(i) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised; during the time period that the Warrant is
exercisable and (i) if the Company shall offer to the Holders for
subscription or purchase by them any shares of stock of any class or any
other rights, or (ii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger
of the Company with or into another corporation, sale, lease or transfer of
all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation, or winding
up of the Company shall be effected, then, in any such case, the Company
shall cause to be delivered to the Holder, at least ten (10) days prior to
the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such offering or rights,
or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation, or winding up is to take place
and the date, if any, is to be fixed, as of which the holders of record shall
be entitled to exchange their Shares for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation, or winding up.
(j) Reclassification, Reorganization or Merger. If, during the time
period that the Warrant is exercisable, there is any reclassification,
capital reorganization, or other change of outstanding Shares of the Company
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of an issuance of Shares by way of
dividend or other distribution or of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary, in which merger the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization, or other change of outstanding
Stock of the class issuable upon exercise of this Warrant), or in case of any
sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares and/or other securities and property receivable upon such
reclassification, capital reorganization, or other change, consolidation,
merger, sale, or conveyance as maybe issued or payable with respect to or in
exchange for the number of Shares of the Company theretofore purchasable upon
the exercise of this Warrant had such recapitalization, capital
reorganization, or other change, consolidation, merger, sale or conveyance
not taken place. Any such provisions shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (h)
shall similarly apply to successive reclassification; capital
reorganizations; changes of Shares; and to successive consolidations,
mergers, sales, or conveyances.
In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional
shares shall be issued in exchange, conversion, substitution or payment, in
whole or in part, for a security of the Company other than Stock, any such
issue shall be treated as an issue of Shares with the amount of the
consideration received upon the issue thereof being determined by the Board
of Directors of the Company, such determination to be final and binding on
the Holder.
(k) Registration Under the Securities Act of 1933.
(1) In the event of a registered public offering of at least
three million dollars in securities as calculated therein ("PO"), the Company
shall use reasonable efforts to file a registration statement under the Act
which shall include the Shares within ten months of the effective date of the
PO. The Company shall bear the expenses of such registration, including but
not limited to legal, accounting and printing fees; provided, however, that
in no event shall the Company be obligated to pay (A) any fees and
disbursements of special counsel for the holders of the Warrants or the
Shares, or (B) any underwriters' discount or commission in respect of such
Warrants or Shares.
(2) In addition to the rights above provided, the Company will
cooperate with the Holder(s) of the Warrants and Shares issued upon the
exercise of the Warrants in preparing and in signing any Registration
Statement required in order to sell or to transfer the aforesaid Shares.
(3) The Company and the holders of the Warrants and Shares
will cooperate with each other in the preparation and the filing to establish
that any proposed disposition by such holders is exempt under the Act. The
holders will indemnify and will hold the Company and its officers, directors
and controlling persons harmless from and against all losses, damages,
expenses and liabilities based upon or arising out of or in connection with
the investigation of any untrue statement of a material fact contained in any
such Registration Statement or any applicable Prospectus, Offering Circular,
amendment or supplement thereto, or arising out of or based upon or in
connection with the investigation of an omission to state a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, to the extent
that such untrue statement or omission was made by the Company or by its
officers and directors in reliance upon information furnished by such owner.
The Company will indemnify and will hold each of such owner and each person,
if any, who controls such owner harmless from and against all losses,
damages, expenses and liabilities based upon or arising out of or in
connection with the investigation of any untrue statement of a material fact
required to be stated or necessary to make any statement therein not
misleading in light of the circumstances in which it was made, but only to
the extent that such untrue statement or omission was not made by the Company
or by its officers or directors upon information furnished by such owner.
Prior to the effective date of any such Registration Statement or
Notification, the Company and each owner of Warrants or the Shares shall
enter into reciprocal indemnification agreements as herein contemplated
substantially in the form customarily used by reputable investment bankers.
(l) Transfer to Comply with the Securities Act of 1933,
(1) This Warrant or the Shares or any other securities issued
or issuable upon exercise of this Warrant may not be sold, transferred, or
otherwise disposed of except to a person who, in the opinion of counsel for
the Company, is a person to whom this Warrant or such Shares may legally be
transferred pursuant to Section (g) hereof without registration and without
the delivery of a current Prospectus under the Act with respect thereto and
then only against receipt of an agreement of such person to comply with the
provisions of this Section (k) with respect to any resale or other
disposition of such securities.
(2) The Company may cause the following legend or one similar
thereto to be set forth on each certificate representing Shares or any other
security issued or issuable upon exercise of this Warrant, unless counsel for
the Company is of the opinion as to any such certificate that such legend is
unnecessary:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended
(the "Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not
be offered for sale, sold, or otherwise transferred except
pursuant to an effective registration statement under the
Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the
satisfaction of the Company.
(3) Applicable Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of the Company's corporate
domicile.
Dated: _______ __, ____
FAMOUS FIXINS, INC.
By:
-----------------------
Jason Bauer, President
ATTEST:
By:
-----------------------
Peter Zorich, Secretary
<PAGE>
EXHIBIT A
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of common stock
in accordance with the terms of that Certain Warrant Certificate No. _____.
The undersigned requests that a certificate for such securities be registered
in the name of ________________________________________ whose address is
________________________________________________________________ and that
such Certificate be delivered to __________________________________________
whose address is ______________________________________________.
Dated:_____________________________
Signature______________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
Social Security________________________________________________
(or Other Identifying Number of Holder)
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
(To be completed and executed by the holder of the Warrant to
which this exhibit is attached to transfer the Warrant.)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
Name:______________________________________________________________
(Please type, write or print in block letters)
Address:_____________________________________________________________
whose taxpayer identification number is _____________________________
the right to purchase the Common Stock represented by this Warrant (warrant
certificate number W-____) to the extent of ____________________ shares as to
which such right is exercisable and does hereby irrevocably constitute and
appoint____________________________________ attorney, to transfer the same on
the books of the Company with full power of substitution.
Dated: ________________________
_________________________________________________________
NOTE: The above signature must correspond with the name as written
upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
_________________________________________________
_________________________________________________
_________________________________________________
(Address of Warrant Holder)
Signature guaranteed by _______________________________________________
EXHIBIT 9
AGREEMENT
AGREEMENT made this 30 day of June, 1998 by and between JASON BAUER
("Bauer") and PETER ZORICH ("Zorich"), each being a shareholder of Famous
Fixins, Inc., a New York corporation, and to be a shareholder of Spectrum
Resources, Inc. (to be renamed Famous Fixins Inc.), a Nevada corporation,
upon the closing of the Plan and Agreement of Reorganization dated May 28,
1998 (the "Acquisition Agreement"). Famous Fixins, Inc. and Spectrum
Resources, Inc. and/or the respective company's assigns or successors in
interest are collectively and individually referenced to as the "Company"
herein.
WHEREAS, each of Bauer and Zorich deem it in their mutual best
interests in order to provide for continuity and harmony in the management
and policies of the Company.
WHEREAS, each of Bauer and Zorich owns an equal number of shares of the
Company,
NOW THEREFORE, Bauer and Zorich agree as follows:
1. This Agreement shall apply to all voting shares of the Company
beneficially held by Bauer and Zorich as of the date of this Agreement and
pursuant to the closing of the Acquisition Agreement.
2. At all meetings of the Company's shareholders and/or directors
called for the purpose of electing directors, each of Bauer and Zorich agrees
to vote his shares and/or votes for the election of each other as a director.
For the election of any additional director, each of Bauer and Zorich shall
vote his shares for the election of each other's designee, provided that at
least two directorships shall need to be filled.
3. So long as Bauer and Zorich are both shareholders of the Company,
each of Bauer and Zorich agrees to vote as a shareholder and a director for
the election of Bauer as President and Chief Executive Officer and Zorich as
Executive Vice President of the Company.
4. Each of Bauer and Zorich agrees to take all such corporate action
as may be necessary or advisable, in the opinion of counsel for the Company,
to effectuate the intention of the foregoing clauses, including without
limitation the amendment of the Certificate of Incorporation of the Company,
if necessary.
5. Each of Bauer and Zorich agrees not to offer to sell, sell,
transfer, assign, hypothecate, pledge or otherwise dispose of any beneficial
interest in his voting shares except subject to the terms of this Agreement,
unless prior written consent is obtained from the other party that such
shares shall not be subject to this Agreement. Each of Bauer and Zorich
agrees that any shares sold in good faith to an independent third party in an
arms'-length transaction for fair market value, through a national securities
exchange as defined by the Securities Act of 1934, or through the National
Association of Securities Dealers, Inc. Over-The-Counter Bulletin Board shall
not be subject to this Agreement upon the close of any such sale.
6. Each of Bauer and Zorich agrees that any stock certificates which
are held subject to this Agreement shall bear the following restrictive
legend or a similar legend of similar effect:
The sale, assignment, gift, bequest, transfer,
pledge, hypothecation, or other encumbrance or
disposition of the Shares represented by this
certificate is restricted by the terms of an
Agreement dated June ___, 1998 between Jason Bauer
and Peter Zorich, which may be examined at the office
of the Company.
7. This Agreement shall be in effect for thirty-six months from the
date of this Agreement.
8. Each of Bauer and Zorich agrees that this Agreement may be revoked
or terminated before thirty-six months from the date hereof only pursuant to
a written agreement referencing this Agreement, signed by each of Bauer and
Zorich.
/s/ Jason Bauer /s/Peter Zorich
- ------------------------ -------------------------
Jason Bauer, Shareholder Peter Zorich, Shareholder
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT is made as of April 12, 1999 between FAMOUS FIXINS, INC., a
New York corporation with offices at 250 West 57th Street, Suite 12501, New
York, New York 10107 ("Employer"), and JASON BAUER, an individual residing in
New York, New York ("Employee").
WITNESSETH:
WHEREAS, Employer desires to retain the services of Employee and
Employee desires to be employed by Employer upon the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby agrees to serve, as President and Chief Executive Officer of Employer,
for the Term of Employment (as defined in Section 2). Employee agrees to
perform such services as are customary for such office. Employee further
agrees to use Employee's best efforts to promote the interest of Employer and
to devote Employee's full business time and energies during normal business
hours to the business and affairs of Employer during the Term of Employment.
2. TERM OF EMPLOYMENT. The employment hereunder shall commence as
of April 12, 1999 and shall continue for a term of five (5) years (the "Term
of Employment"), unless earlier terminated: (a) upon death of Employee; (b)
at the option of Employer upon 30 days' prior written notice to Employee, in
the event Employee, by reason of physical injury or illness, is unable to
materially perform his duties hereunder for a continuous period of 120 days
and has no expectation of returning to work within a reasonable time
thereafter; or (c) upon the discharge of Employee by the Board of Directors
of Employer for "cause" (as defined in Section 10 hereof). The Term of
Employment may be renewed for an additional five years commencing five years
after the execution of this Agreement, upon written notice of the Board of
Directors of Employer given at any time in the first eight months of the
fifth year of the Term of Employment, subject to acceptance thereof by
Employee.
3. COMPENSATION.
A. Base Salary. As compensation for the services to be
provided hereunder and in consideration of Employee's agreement not to
compete as set forth in Section 4, during the Term of Employment, Employer
shall pay Employee an annual salary of one hundred and fifty thousand dollars
($150,000) with adjustments of not less than the change in the Consumer Price
Index, or such greater annual salary as may be established by Employer's
Board of Directors, which shall be payable in appropriate installments to
conform with the regular payroll dates for salaried personnel of Employer.
Commencing in the third year of this Agreement, Employee's base annual salary
shall be increased, each fiscal quarter, to equal at least one percent of the
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA") in the most recent fiscal year.
B. Incentive Earnings Bonus. In addition to any bonus to be
determined by the Board of Directors, Employee is eligible for certain
incentive bonuses contingent upon certain corporate earnings milestones.
Employee is hereby granted five year options to purchase up to 1,500,000
shares of the Company's common stock, par value $.001 per share. These
options will vest upon the achievement of certain corporate earnings
milestones as set forth herein. Options to purchase 600,000 shares at $.30
per share shall vest following the first fiscal year end in which the Company
obtains four or more new celebrity, Company, entity or athlete licenses
similar in stature and structure to the eight licenses the Company presently
has (the "Licenses") or in which the Company's EBITDA exceeds $300,000;
additional options to purchase 300,000 additional shares at $.30 per share
shall vest following the first fiscal year end in which the Company obtains a
further three new Licenses or more or in which the Company's EBITDA exceeds
$500,000; additional options to purchase 300,000 additional shares at $.30
per share shall vest following the first fiscal year end in which the Company
obtains a further three new Licenses or more or in which the Company's EBITDA
exceeds $700,000; and additional options to purchase 300,000 additional
shares at $.30 per share shall vest following the first fiscal year end in
which the Company obtains a further three new Licenses or more or in which
the Company's EBITDA exceeds $1,000,000. These options are cumulative and
are subject to anti-dilution rights. If any milestones are achieved in the
same year, all such options shall vest at the time such milestone is
achieved.
C. Bonus. Employee shall, during the term of this Agreement,
be entitled to an annual performance bonus equal to up to fifty percent (50%)
of Employee's base salary, as defined in Section 3.A, or such other amount as
the Board of Directors may determine. Additionally, Employee shall be
entitled to such other bonuses as the Board of Directors shall determine from
time to time.
D. Other Benefits. Employee shall be entitled to the
following fringe benefits, perquisites, and other benefits of employment
during the Term of Employment: (i) medical and dental insurance under such
group medical and dental insurance policies as Employer may provide to its
employees; (ii) sick days in accordance with Employer's policy regarding
officers; (iii) up to six (6) weeks vacation in each year fully worked; (iv)
participation in Employer's 401(k) plan or such other plan as Employer may
adopt; (v) participation in Employer's employee stock option plan when and if
established; and (vi) Employer shall also during the term hereof and for one
year thereafter provide and pay for a fifteen year (15-year) term life
insurance policy on the life of Employee, subject to Employee's reasonable
insurability, with a face amount of benefit of $1,000,000 with the
beneficiary thereof to be Employee's estate, or as otherwise directed by
Employee. Employee shall have the option to maintain such insurance at his
own expense one year after the end of the term hereof, if such term is not
renewed. In addition to the foregoing, Employee shall also be entitled to
any benefits, perquisites and other benefits to the extent that the Board of
Directors determines such benefits are to be made available to Employer's
employees in general.
E. Payment Upon Early Termination. In the event of early
termination of employment for any reason specified in Section 10 hereof,
Employer shall no longer be obligated to make any payments of compensation to
Employee or Employee's estate under this Agreement except as provided for
herein. However, any salary or bonus earned and/or vested for prior periods,
but not yet paid, shall be paid by Employer to Employee or Employee's estate.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY; CONFIDENTIALITY.
A. Covenant Not to Compete and Solicit. During the Term of
Employment, Employee will not, within any jurisdiction in which Employer or
any affiliate conducts its business operations, or in any way materially
competing with Employer, directly or indirectly, own, manage, operate,
control, be employed by or participate in the ownership, management,
operation or control of, or be connected in any manner with, any business of
the type or character engaged in or competitive with that conducted by
Employer. The decision of Employer's Board of Directors as to what
constitutes a competing business shall be final and binding upon Employee,
and such decision shall be made in good faith. For these purposes, ownership
by Employee or any affiliate of Employee of securities of a public company
not in excess of one percent (1%) of any class of such securities shall not
be considered to be competition with Employer.
For a period of three (3) years after termination of
Employee's employment with Employer, Employee further agrees to refrain from
interfering with the employment relationship between Employer and its other
employees by soliciting any of such individuals to participate in independent
business ventures and agrees to refrain from soliciting business from any
client or prospective client (as disclosed in a list to be provided to
Employee by Employer at the time he ceases to be employed, which list shall
be binding upon Employee) of Employer's for Employee's benefit or for any
other entity.
It is the desire and intent of the parties that if any
provisions of this Section 4(A) shall be adjudicated to be invalid or
unenforceable, this Section 4(A) shall be deemed amended to delete therefrom
such provisions or portion adjudicated to be invalid or unenforceable, such
amendment to apply only with respect to the operation of this paragraph in
the particular jurisdiction in which such adjudication is made.
B. Intellectual Property. During the Term of Employment,
Employee will disclose to Employer all ideas, inventions and business plans
developed by Employee during such period which relates directly or indirectly
to the business of Employer or affiliates, including without limitation any
process, operation, product or improvement which may be patentable or
copyrightable. Employee agrees that such will be the property of Employer
and that Employee will, at Employer's request and cost, do whatever is
necessary to secure the rights thereto by patent, copyright or otherwise to
Employer.
C. Confidentiality. Employee agrees to not divulge to anyone
(other than Employer or any other persons employed or designated by Employer)
any knowledge or information of any type whatsoever of a confidential nature
relating to the business of Employer or any of its subsidiaries or
affiliates, including without limitation all types of trade secrets (unless
readily ascertainable from public or published information or trade sources).
Employee further agrees not to disclose, publish or make use of any such
knowledge or information of a confidential nature without prior written
consent of Employer.
5. CHANGE OF CONTROL. Employee shall have the right to terminate
the employment agreement in the event of a "change in control" of Employer.
"Change of control" is defined to be any of the following: (i) a change in
the ownership or management of Employer that would be required to be reported
in response to certain provisions of the Securities Exchange Act of 1934;
(ii) an acquisition (other than directly from Employer) by a person or entity
(excluding Employer) of 25% or more of the Employer's common stock or the
Employer's then outstanding voting securities; (iii) a change in a majority
of the current Board of Directors (the "Incumbent Board") (excluding any
persons approved by a vote of at least a majority of the Incumbent Board
other than in connection with an actual or threatened proxy contest); (iv)
consummation of a reorganization, merger, consolidation or sale of all or
substantially all of the Company's assets (collectively, a "Transaction")
other than a Transaction in which all or substantially all of the
shareholders of Employer prior to such transaction own, in the same
proportion, more than 50% of the voting power of the entity resulting from
the Transaction, at least a majority of the board of directors of the
resulting entity were members of the Incumbent Board, and after which no
person (other than the resulting entity and certain affiliates) beneficially
owns 25% or more of the voting power of the resulting entity, except to the
extent such ownership existed prior to the Transaction; or (v) the approval
by the Employer's stockholders of a complete liquidation or dissolution of
Employer. Upon a change in control, Employee shall be entitled to a lump sum
payment, payable within one month of termination, equal to two hundred and
ninety percent (290%) of Employee's "base amount", as defined in Section
28OG(3) of the Code.
6. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for reasonable travel and other expenses incurred in connection
with Employee's services to Employer pursuant to and during the Term of
Employment upon a basis consistent with the policies established or announced
by Employer.
7. AUTOMOBILE. Employer presently provides Employee with an
automobile, including related maintenance, repairs, insurance, and other
costs, for the exclusive use of Employee, under a lease, due to expire in
2001. Employer agrees to continue to said lease, make all necessary payments
and related expenses to said automobile, and prior to the expiration of the
lease, Employer shall obtain a new lease for a similar new car.
Employer recognizes Employee's need for an automobile for
business purposes. Employer, therefore, upon the expiration of the
aforementioned automobile lease, shall provide Employee with an automobile,
including related maintenance, repairs, insurance, and other costs. The
automobile will be selected by Employee, and the automobile and related costs
shall be comparable to those which Employer presently provides Employee.
8. DEATH BENEFITS. If Employee dies during the Term of Employment,
Employer shall pay to Employee's estate the compensation that would otherwise
be payable to Employee for twelve months following the month in which his
death occurs. In addition, Employer shall pay $100,000, in a lump sum, to
the Employee's widow, or, if he is not then survived by his widow, to the
Employee's surviving children in equal shares, or, if there are no surviving
children, to the Employee's estate.
9. BREACH BY EMPLOYEE. Both parties recognize that the services to
be rendered under this Agreement by Employee are special, unique and
extraordinary in character, and that in the event of a breach by Employee of
the terms and conditions of this Agreement to be performed by Employee, or in
the event Employee performs services during the Term of Employment for any
person, firm, corporation or other entity engaged in a competing line of
business with Employer, or otherwise breaches this Agreement, Employer shall
be entitled, if it so elects, to institute proceedings and to prosecute them
in any court of competent jurisdiction, either in law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the specific
performance thereof by Employee, or to enjoin Employee from performing
services for any such other person, firm, corporation or other entity.
10. TERMINATION FOR CAUSE. Employer may terminate Employee for cause
upon thirty days' prior written notice to Employee. For purposes of this
Agreement, an event or occurrence constituting "cause" shall mean:
A. Employee's willful failure or refusal after notice thereof,
to perform specific directives of Employer's Board of Directors, when such
directives are consistent with the scope and nature of Employee's duties and
responsibilities as set forth in Section 1 and elsewhere herein and such
failure or refusal is: (i) not corrected within a reasonable time after
receipt of written notice is sent by Employer's Board of Directors after
resolution authorizing such notice; (ii) the direct material cause of
material damages to the Employer; and (iii) within the ability and power of
Employee to materially perform such directive as to render such failure or
refusal willful;
B. Employee's conviction of a felony or of any crime involving
moral turpitude, fraud or misrepresentation and final resolution of all
appeals therefrom;
C. Any final court determination of gross or wilful conduct of
Employee resulting in substantial loss to Employer, substantial damage to
Employer's reputation or any material theft from Employer;
D. Other than by reason of physical injury or illness, a final
court determination of Employee's material failure to perform the duties and
responsibilities under this Agreement causing material damage to Employer; or
E. Any final court determination of any material breach (not
covered by any of the clauses (A) through (D)) of any of the provisions of
this Agreement, causing material damage to Employer, and such breach was not
cured within ten days after written notice thereof to Employee by Employer.
11. ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Employee herein
may not be sold, transferred, assigned, pledged or hypothecated by Employee.
The rights and obligations of Employer hereunder shall be binding upon and
run in favor of the successors and assigns of Employer. In the event of any
attempted assignment or transfer of rights hereunder contrary to the
provisions hereof, Employer shall have no further liability for payments
hereunder. Employee specifically consents to assignment of this Agreement by
Employer pursuant to any reorganization or business combination that Employer
may effect hereafter.
12. GOVERNING LAW; CAPTIONS. This Agreement contains the entire
agreement between the parties and shall be governed by the laws of the State
of New York. It may not be changed orally, but only by agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought, and consented to in writing by the Board
of Directors of Employer. Section headings are for convenience or reference
only and shall not be considered a part of this Agreement.
13. PRIOR AGREEMENTS. This Agreement supersedes and terminates all
prior agreements between Employer and Employee relating to the subject matter
herein addressed.
14. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person to Employer by
delivery to its Chairman of the Board of Directors or sent by telex, telecopy
or by registered or certified mail, postage prepaid, addressed as follows:
if to Employee, to:
Jason Bauer
300 West 72nd Street, #4C
New York, New York 10023
if to Employer, to:
Famous Fixins, Inc.
250 West 57th Street, Suite 2501
New York, New York 10107
with a copy to:
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, New York 10016
IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, on and as of the date and
year first above written.
FAMOUS FIXINS, INC.
By: /s/ Peter Zorich
---------------------------------------------
Peter Zorich, Executive Vice President, Director
EMPLOYEE
/s/ Jason Bauer
------------------------------------------------
Jason Bauer
EXHIBIT 10.2
_____________________________________________________________________________
FISK BUILDING ASSOCIATES
To
FAMOUS FIXIN S, INC.
_____________________________________________________________________________
_____________________________________________________________________________
LEASE
_____________________________________________________________________________
_____________________________________________________________________________
Date May 13, 1998
Space 2501
From 6/1/98
To 4/30/01
Annual Rent $ $14,400.00
Monthly Rent $ $1200.00
_____________________________________________________________________________
_____________________________________________________________________________
HELMSLEY-SPEAR, INC.
Real Estate
Lincoln Building
60 East 42nd Street
New York, N.Y. 10165
Phone (212) 687-6400
LEASE made as of the 13th day of May, 1998, between FISK BUILDING
ASSOCIATES HAVING AN OFFICE C/O HEMLSLEY_SPEAR, INC. AT 250 WEST 57TH STREET
NEW YORK, NY 10107 hereinafter referred to as "Landlord" or "Lessor", and
FAMOUS FIXIN S, INC. hereinafter referred to as "Tenant" or "Lessee".
WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord 2501 (said space is hereinafter called the "premises") in
the building known as 250 West 57th Street ("the building") in the County of
New York, City of New York, for a term of 2 Years 11 Months to commence on
the 1st day of June 1998, and to expire on the 30th day of April, 2001, or
until such term shall sooner end as in Article 12 and elsewhere herein
provided, both dates inclusive, at a fixed annual rental (subject to Articles
23 and 41) at the annual rate of
$FOURTEEN THOJSAND FOUR HUNDRED DOLLARS AND NO CENTS ($14,400.00)
payable in equal monthly installments in advance on the first day of each
month, except that the first installment of rent due under this lease shall
be paid by Tenant upon its execution of this lease, unless this lease be a
renewal.
Landlord and Tenant covenant and agree:
PURPOSE.
1. Tenant shall use and occupy the premises only for offices relating
to Tenant's business, and for no other purpose. General & Executive Offices
RENT AND ADDITIONAL RENT.
2. Tenant agrees to pay rent as herein provided at the office of
Landlord or such other place as Landlord may designate, payable in United
States legal tender, by cash, or by good and sufficient check drawn on a New
York City Clearing House Bank, and without any set off or deduction
whatsoever. Any sum other than fixed rent payable hereunder shall be deemed
additional rent and due on demand.
ASSIGNMENT.
3. Neither Tenant nor Tenant's legal representatives or successors in
interest by operation of law or otherwise, shall assign, mortgage or
otherwise encumber this lease, or sublet or permit all or part of the
premises to be used by others, without the (prior written consent of Landlord
in each instance. The transfer of a majority of the issued and outstanding
capital stock of any corporate tenant or sublessee of this lease or a
majority of the total interest in any partnership tenant or sublessee,
however accomplished, and whether in a single transaction or in a series of
related or unrelated transactions, and the conversion of a tenant or
sublessee entity to either a limited liability company or a limited liability
partnership shall be deemed an assignment of this lease or of such sublease.
The merger or consolidation of a corporate tenant or sublessee where the net
worth of the resulting corporation is less than the net worth of the tenant
or sublessee immediately prior to such merger or consolidation shall be
deemed an assignment of this lease or of such sublease. If without Landlord's
written consent this lease is assigned, or the premises are sublet or
occupied by anyone other than Tenant, Landlord may accept the rent from such
assignee, subtenant or occupant, and apply the net amount thereof to the rent
herein reserved, but no such assignment, subletting, occupancy or acceptance
of rent shall be deemed a waiver of this covenant. Consent by Landlord to an
assignment or subletting shall not relieve Tenant from the obligation to
obtain Landlord's written consent to any further assignment or subletting. In
no event shall any permitted sublessee assign or encumber its sublease or
further sublet all or any portion of its sublet space, or otherwise suffer or
permit the sublet space or any part thereof to be used or occupied by others,
without Landlord's prior written consent in each instance. A modification,
amendment or extension of a sublease shall be deemed a sublease.
DEFAULT.
4. Landlord may terminate this lease on three (3) days' notice: (a) if
rent or additional rent is not paid within three (3) days after written
notice from Landlord; or (b) if Tenant shall have failed to cure a default in
the performance of any covenant of this lease (except the payment of rent),
or any rule or regulation hereinafter set forth, within five (5) days after
written notice thereof from Landlord, or if default cannot be completely
cured in such time, if Tenant shall rot promptly proceed to cure such default
within said five (5) days, or shall not complete the curing of such default
with due diligence; or (c) when and to the extent permitted by law, if a
petition in bankruptcy shall be filed by or against Tenant or if Tenant shall
make a general assignment for the benefit of creditors, or receive the
benefit of any insolvency or reorganization act; or (d) if a receiver or
trustee is appointed for any portion of Tenant's; property and such
appointment is not vacated within twenty (20) days; or (e) if an execution or
attachment shall be issued under which the premises shall be taken or
occupied or attempted to be taken or occupied by an one other than Tenant; or
(f) if the premises become and remain vacantor deserted for a period often
(10) days; or (g) if Tenant shall default beyond any grace period under any
other lease between Tenant and Landlord; or (h) if Tenant shall fail to move
into or take possession of the premises within fifteen (15) days after
commencement of the term of this lease.
At the expiration of the three (3) day notice period, this lease and
any rights of renewal or extension thereof shall terminate as completely as
if that were the date originally fixed for the expiration of the term of this
lease, but Tenant shall remain liable as hereinafter provided.
RELETTING, ETC.
5. If Landlord shall re-enter the premises on the default of Tenant, by
summary proceedings or otherwise: (a) Landlord may re-let the premises or any
part thereof as Tenant's agent, in the name of Landlord, or otherwise, for a
term shorter or longer than the balance of the term of this lease, and may
grant concessions or free rent. (b) Tenant shall pay Landlord any deficiency
between the rent hereby reserved and the net amount of any rents collected by
Landlord for the remaining term of this lease, through such reletting. Such
deficiency shall become due and payable monthly, as it is determined.
Landlord shall have no obligation to re-let the premises, and its failure or
refusal to do so, or failure to collect rent on re-letting, shall not affect
Tenant's liability hereunder. In computing the net amount of rents collected
through such re-letting, Landlord may deduct all expenses incurred in
obtaining possession or re-letting the premises, including legal expenses and
fees, brokerage fees, the cost of restoring the premises to good order, and
the cost of all alterations and decorations deemed necessary by Landlord to
effect re-letting. In no event shall Tenant be entitled to a credit or
repayment for rerental income which exceeds the sums payable by Tenant
hereunder or which covers a period after the original term of this lease. (c)
Tenant hereby expressly waives any right of redemption granted by any present
or future law. "Re-enter" and "re-entry" as used in this lease are not
restricted to their technical legal meaning. In the event of a breach or
threatened breach of any of the covenants or provisions hereof Landlord shall
have the right of injunction. Mention herein of any particular remedy shall
not preclude Landlord from any other available remedy. (d) Landlord shall
recover as liquidated damages, in addition to accrued rent and other charges,
if Landlord's re-entry is the result of Tenant's bankruptcy, insolvency, or
reorganization, the full rental for the maximum period allowed by any act
relating to bankruptcy, insolvency or reorganization.
If Landlord re-enters the premises for any cause, or if Tenant abandons
or vacates the premises, and after the expiration of the term of this lease,
any property left in the premises by Tenant shall be deemed to have been
abandoned by Tenant, and Landlord shall have the right to retain or dispose
of such property in any manner without any obligation to account therefor to
Tenant. If Tenant shall at any time default hereunder, and if Landlord shall
institute an action or summary proceedings against Tenant based upon such
default, then Tenant will reimburse Landlord for the legal expenses and fees
thereby incurred by Landlord.
LANDLORD MAY CURE DEFAULTS.
6. If Tenant shall default in performing any covenant or condition of
this lease. Landlord may perform the same for the account of Tenant, and if
Landlord, in connection therewith, or in connection with any default by
Tenant, makes any expenditures or incurs any obligations for the payment of
money, including but not limited to attorney's fees, such sums so paid or
obligations incurred shall be deemed to be additional rent hereunder, and
shall be paid by Tenant to Landlord within five (5) days of rendition of any
bill or statement therefor, and if Tenant's lease term shall have expired at
the time of the making of such expenditures or incurring of such obligations,
such sums shall be recoverable by Landlord as damages.
ALTERATIONS.
7. Tenant shall make no decoration, alteration, addition or improvement
in the premises, without the prior written consent of Landlord, and then only
by contractors or mechanics and in such manner and with such materials as
shall be approved by Landlord. All alterations, additions or improvements to
the premises, including window and central air conditioning equipment and
duct work, except movable office furniture and equipment installed at the
expense of Tenant, shall, unless Landlord elects otherwise in writing, become
the property of Landlord, and shall be surrendered with the premises at the
expiration or sooner termination of the term of this lease. Any such
alterations, additions and improvements which Landlord shall designate, shall
be removed by Tenant and any damage repaired, at Tenant's expense, prior to
the expiration of the term of this lease.
LIENS.
8. Prior to commencement of its work in the demised premises, Tenant
shall obtain and deliver to Landlord a written letter of authorization, in
form satisfactory to Landlord's counsel, signed by architects, engineers and
designers to become involved in such work, which shall confirm that any of
their drawings or plans are to be removed from any filing with governmental
authorities, on request of Landlord, in the event that said architect
engineer, or designer thereafter no longer is providing services with respect
to the demised premises. With respect to contractors, subcontractors
materialmen and laborers, and architects, engineers and designers, for ali
work or materials to be furnished to Tenant at the premises, Tenant agrees to
obtain and deliver to Landlord written and unconditional waiver of mechanics
liens upon the premises or the building, after payments to the contractors,
etc., subject to any then applicable provisions of the Lien law.
Notwithstanding the foregoing, Tenant at its expense shall cause any lien
filed against the premises or the building, for work or materials claimed to
have been furnished to Tenant, to be discharged of record within twenty (20)
days after notice thereof.
REPAIRS.
9. Tenant shall take good care of the premises and the fixtures and
appurtenances therein, and shall make all repairs necessary to keep them in
good working order and condition, including structural repairs when those are
necessitated by the act, omission or negligence of Tenant or its agents,
employees or invitees. During the term of this lease, Tenant may have the use
of any air-conditioning equipment located in the premises, and Tenant, at its
own cost and expense, shall maintain and repair such equipment and shall
reimburse Landlord, in accordance with Article 41 of this lease, for
electricity consumed by the equipment. The exterior walls of the building,
the windows and the portions of all window sills outside same and areas above
any hung ceiling are not part of the premises demised by this lease, and
Landlord hereby reserves all rights to such parts of the building.
DESTRUCTION.
10. If the premises shall be partially damaged by fire or other
casualty, the damage shall be repaired at the expense of Landlord, but
without prejudice to the rights of subrogation, if any, of Landlord's
insurer. Landlord shall not be required to repair or restore any of Tenant's
property or any alteration or leasehold improvement made by or for Tenant at
Tenant's expense. The rent shall abate in proportion to the portion of the
premises not usable by Tenant. Landlord shall not be liable to Tenant for any
delay in restoring the premises, Tenant's sole remedy being the right to an
abatement of rent, as above provided. If the premises are rendered wholly
untenantable by fire or other casualty and if Landlord shall decide not to
restore the premises, or if the building shall be so damaged that Landlord
shall decide to demolish it or to rebuild it (whether or not the premises
have been damaged), Landlord may within ninety (90) days after such fire or
other cause give written notice to Tenant of its election that the term of
this lease shall automatically expire no less than ten (10) days after such
notice is given. Notwithstanding the foregoing, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and to
the extent that such insurance is in force and collectible and to the extent
permitted by law, Landlord and Tenant each hereby releases and waives all
right of recovery against the other or any one claiming through or under each
of them by way of subrogation or otherwise. The foregoing release and waiver
shall be in force only if both releasors' insurance policies contain a clause
providing that such a release or waiver shall not invalidate the insurance
and also, provided that such a policy can be obtained without additional
premiums. Tenant hereby expressly waives the provisions of Section 227 of the
Real Property law and agrees that the foregoing provisions of this Article
shall govern and control in lieu thereof.
END OF TERM.
11. Tenant shall surrender the premises to Landlord at the expiration
or sooner termination of this lease in good order and condition, except for
reasonable wear and tear and damage by fire or other casualty, and Tenant
shall remove all of its property. Tenant agrees it shall indemnify and save
Landlord harmless against all costs, claims, loss or liability resulting from
delay by Tenant in so surrendering the premises, including, without
limitation, any claims made by any succeeding tenant founded on such delay.
Additionally, the parties recognize and agree that other damage to Landlord
resulting from any failure by Tenant timely to surrender the premises will be
substantial, will exceed the amount of monthly rent theretofore payable
hereunder, and will be impossible of accurate measurement. Tenant therefore
agrees that if possession of the premises is not surrendered to Landlord
within one (1) day after the date of the expiration or sooner termination of
the term of this lease, then Tenant will pay Landlord as liquidated damages
for each month and for each portion of any month during which Tenant holds
over in the premises after expiration or termination of the term of this
lease, a sum equal to three times the average rent and additional rent which
was payable per month under this lease during the last six months of the term
thereof. The aforesaid obligations shall survive the expiration or sooner
termination of the term of this lease. At any time during the term of this
lease, Landlord may exhibit the premises to prospective purchasers or
mortgagees of Landlord's interest therein. During the last year of the term
of this lease, Landlord may exhibit the premises to prospective tenants.
SUBORDINATION AND ESTOPPEL, ETC.
12. Tenant has been informed and understands that Landlord is the
Tenant under a lease of the land and entire building of which the premises
form a part (hereinafter called the "Master Lease"). This lease is and shall
be subject and subordinate to the Master Lease and all other ground and
underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which the premises form a part, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
This Article shall be self-operative and no further instrument of
subordination shall be necessary. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Landlord may request.
Tenant hereby appoints Landlord as tenant's irrevocable attorney-in-fact to
execute any document of subordination on behalf of Tenant. In the event that
the Master Lease or any other ground or underlying lease is terminated or any
mortgage foreclosed, this lease shall not terminate or be terminable by
Tenant (except as hereinafter provided as to Master Lease expiration of term)
unless Tenant was specifically named in any termination or foreclosure
judgment or final order. In the event that the Master Lease or any other
ground or underlying lease is terminated as aforesaid, or expires (as
hereinafter provided), or if the interests of Landlord under this lease are
transferred by reason of or assigned in lieu of foreclosure or other
proceedings for enforcement of any mortgage, or if the holder of any mortgage
acquires a lease in substitution therefor, then tenant will, at the option to
be exercised in writing by the landlord under the Master Lease or such
purchaser, assignee or lessee, as the case may be, (i) attom to it and will
perform for its benefit all the terms, covenants and conditions of this lease
on the Tenant's part to be performed with the same force and effect as if
said landlord or such purchaser, assignee or lessee, were the landlord
originally named in this lease, or (ii) enter into a new lease with said
lessor or such purchaser, assignee or lessee, as landlord, for the remaining
term of this lease and otherwise on the same terms, conditions and rentals as
herein provided. If the current term of the Master Lease shall expire prior
to the date set forth herein for the expiration of this lease, then, unless
Landlord, at its sole option, shall have elected to extend or renew the term
of the Master Lease, or unless the lessor under the Master Lease elects that
the Tenant attorn or enter into a new lease as aforesaid, the term of this
lease shall expire on the date of expiration of the Master Lease,
notwithstanding the later expiration date hereinabove set forth. If the
Master Lease is renewed, then the term of this lease shall expire as
hereinabove set forth. From time to time, Tenant, on at least ten (10) days'
prior written request by Landlord will deliver to Landlord a statement in
writing certifying that this lease is unmodified and in full force and effect
(or if there shall have been modifications, that the same is in full force
and effect as modified and stating the modification) and the dates to which
the rent and other charges have been paid and stating whether or not the
Landlord is in default in performance of any covenant, agreement, or condition
contained in this lease and, if so, specifying each such default of
which Tenant may have knowledge.
CONDEMNATION.
13. If the whole or any substantial part of the premises shall be
condemned by eminent domain or acquired by private purchase in lieu thereof
for any public or quasi-public purpose, this lease shall terminate on the
date of the vesting of title through such proceeding or purchase, and Tenant
shall have no claim against Landlord for the value of any unexpired portion
of the term of this lease, nor shall Tenant be entitled to any part of the
condemnation award or private purchase price. If less than a substantial part
of the premises is condemned, this lease shall not terminate, but rent shall
abate in proportion to the portion of the premises condemned.
REQUIREMENTS OF LAW.
14. (a) Tenant at its expense shall comply with all laws, orders and
regulations of any governmental authority having or asserting jurisdiction
over the premises, which shall impose any violation, order or duty upon
Landlord or Tenant with respect to the premises or the use or occupancy
thereof including, without limitation, compliance in the premises with all
City, State and Federal laws, rules and regulations on the disabled or
handicapped, on fire safety and on hazardous materials. The foregoing shall
not require Tenant to do structural work.
(b) Tenant shall require every person engaged by him to clean any
window in the premises from the outside, to use the equipment and safety
devices required by Section 202 of the labor law and the rules of any
governmental authority having or asserting jurisdiction.
(c) Tenant at its expense shall comply with all requirements of the New
York Board of Fire Underwriters, or any other similar body affecting the
premises and shall not use the premises in a manner which shall increase the
rate of fire insurance of Landlord or of any other tenant, over that in
effect prior to this lease. If Tenant's use of the premises increases the
fire insurance rate, Tenant shall reimburse Landlord for all such increased
costs. That the premises are being used for the purpose set forth in Article
I hereof shall not relieve Tenant from the foregoing duties, obligations and
expenses.
CERTIFICATE OF OCCUPANCY.
15. Tenant will at no time use or occupy the premises in violation of
the certificate of occupancy issued for building. The statement in this
lease of the nature of the business to be conducted by Tenant shall not be
deemed to constitute a representation or guaranty by Landlord that such use
is lawful or permissible in the premises under the certificate of occupancy
for the building.
POSSESSION.
16. If Landlord shall be unable to give possession of the premises on
the commencement date of the term because of the retention of possession of
any occupant thereof alteration or construction work, or for any other reason
except as hereinafter provided, Landlord shall not be subject to any
liability for such failure. In such event, this lease shall stay in full
force and effect, without extension of its term. However, the rent hereunder
shall not commence until the premises are available for occupancy by Tenant.
If delay in possession is due to work, changes or decorations being made by
or for Tenant, or is otherwise caused by Tenant, there shall be no rent
abatement and the rent shall commence on the date specified in this lease. If
permission is given to Tenant to occupy the demised premises or other
premises prior to the date specified as the commencement of the term, such
occupancy shall be deemed to be pursuant to the terms of this lease, except
that the parties shall separately agree as to the obligation of Tenant to pay
rent for such occupancy. The provisions of this Article are intended to
constitute an "express provision to the contrary" within the meaning of
Section 223(a), New York Real Property Law.
QUIET ENJOYMENT.
17. Landlord covenants that if Tenant pays the rent and performs all of
Tenant's other obligations under this lease, Tenant may peaceably and quietly
enjoy the demised premises, subject to the terms, covenants and conditions of
this lease and to the ground leases, underlying leases and mortgages
hereinbefore mentioned.
RIGHT OF ENTRY.
18. Tenant shall permit Landlord to erect and maintain pipes and
conduits in and through the premises. Landlord or its agents shall have the
right to enter or pass through the premises at all times, by master key, by
reasonable force or otherwise, to examine the same, and to make such
repairs, alterations or additions as it may deem necessary or desirable to
the premises or the building, and to take all material into and upon the
premises that may be required therefor. Such entry and work shall not
constitute an eviction of Tenant in whole or in part, shall not be grounds
for any abatement of rent, and shall impose no liability on Landlord by
reason of inconvenience or injury to Tenant's business. Landlord shall have
the right at any time, without the same constituting an actual or
constructive eviction, and without incurring any liability to Tenant, to
change the arrangement and/or location of entrances or passageways. windows,
corridors, elevators, stairs, toilets, or other public parts of the building,
and to change the name or number by which the building is known.
VAULT SPACE.
19. Anything contained in any plan or blueprint to the contrary
notwithstanding, no vault or other space not within the building property
line is demised hereunder. Any use of such space by Tenant shall be deemed to
be pursuant to a license, revocable at will by Landlord, without diminution
of the rent payable hereunder. If Tenant shall use such vault space, any fees
taxes or charges made by any governmental authority for such space shall be
paid by Tenant.
INDEMNITY.
20. Tenant shall indemnify, defend and save Landlord harmless from and
against any liability or expense arising from the use or occupation of the
premises by Tenant, or anyone on the premises with Tenant's permission, or
from any breach of this lease.
LANDLORD'S LIABILITY.
21. This lease and the obligations of Tenant hereunder shall in no way
be affected because Landlord is unable to fulfill any of its obligations or
to supply any service, by reason of strike or other cause not within
Landlord's control. Landlord shall have the right, without incurring any
liability to Tenant, to stop any service because of accident or emergency, or
for repairs, alterations or improvements, necessary or desirable in the
judgment of Landlord, until such repairs, alterations or improvements shall
have been completed. Landlord shall not be liable to Tenant or anyone else,
for any loss or damage to person, property or business, unless due to the
negligence of Landlord nor shall Landlord be liable for any latent defect in
the premises or the building. Tenant, during the term of this lease, shall
carry public liability and property damage insurance, from a company
authorized to do business in New York, with limitations acceptable to
Landlord, which policy or policies shall name the Landlord and its designees
as additional insureds. Evidence of the policies, and of their timely
renewal, shall be delivered to Landlord. All such insurance shall contain an
agreement by the insurance company that the policy or policies will not be
cancelled or the coverage changed, without thirty (30) days' prior written
notice to the Landlord. Tenant agrees to look solely to Landlord's estate and
interest in the land and building, or the lease of the building or of the
land and building, and the demised premises, for the satisfaction of any
right or remedy of Tenant for the collection of a judgment (or other judicial
process) requiring the payment of money by Landlord, in the event of any
liability by Landlord, and no other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies under or with respect to this lease, the
relationship of landlord and tenant hereunder, or Tenant's use and occupancy
of the demised premises or any other liability of Landlord to Tenant (except
for negligence).
CONDITION OF PREMISES.
22. Tenant acknowledges that Landlord has made no representation or
promise, except as herein expressly set forth. Tenant agrees to accept the
premises "as is", except for any work which Landlord ha expressly agreed in
writing to perform.
COST OF LIVING ADJUSTMENTS.
23. The fixed annual rent reserved in this lease and payable hereunder
shall be adjusted, as of the times and in the manner set forth in this
Article:
(a) Definitions: For the purposes of this Article, the following
definitions shall apply:
(i) The term "Base Year" shall mean the full calendar year during which
the term of this lease commences.
(ii) The term "Price Index" shall mean the "Consumer Price Index"
published by the Bureau of Labor Statistics of the U.S. Department of Labor,
All Items. New York, N.Y.--Northeastern, N.J., all urban consumers (presently
denominated "CPI-U"), or a successor or substitute index appropriately
adjusted.
(iii) the term "Price Index for the Base Year" shall mean the average
of the monthly All Items Price Indexes for each of the 12 months of the Base
Year.
(b) Effective as of each January and July subsequent to the Base Year,
there shall be made a cost of living adjustment of the fixed annual rental
rate payable hereunder. The July adjustment shall be based on the percentage
difference between the Price Index for the preceding month of June and the
Price Index for the Base Year. The January adjustment shall be based on such
percentage difference between the Price Index for the preceding month of
December and the Price Index for the Base Year.
(i) In the event the Price Index for June in any calendar year during
the term of this lease reflects an increase over the Price Index for the Base
Year, then the fixed annual rent herein provided to be paid as of the July
1st following such month of June (unchanged by any adjustments under this
Article) shall be multiplied by the percentage difference between the Price
Index for June and the Price Index for the Base Year, and the resulting sum
shall be added to such fixed annual rent, effective as of such July 1st. Said
adjusted fixed annual rent shall thereafter be payable hereunder, in equal
monthly installments, until it is readjusted pursuant to the terms of this
lease.
(ii) In the event the Price Index for December in any calendar year
during the term of this lease reflects an increase over the Price Index for
the Base Year, then the fixed annual rent herein provided to be paid as of
the January 1st following such month of December (unchanged by any
adjustments under this Article) shall be multiplied by the percentage
difference between the Price Index for December and the Price Index for the
Base Year, and the resulting sum shall be added to such fixed annual rent
effective as of such January 1st. Said adjusted fixed annual rent shall
thereafter be payable hereunder, in equal monthly installments, until it is
readjusted pursuant to the terms of this lease.
The following illustrates the intentions of the parties hereto as to
the computation of the aforementioned cost of living adjustment in the annual
rent payable hereunder
Assuming that said fixed annual rent is $10,000, that the Price
Index for the Base Year was 102.0 and that the Price Index for the
month of June in a calendar year following the Base Year was 105.0.
then the percentage increase thus reflected, i.e., 2.941% (3.0/102.0)
would be multiplied by $10,000, and said fixed annual rent would be
increased by $294.10 effective as of July 1st of said calendar year.
In the event that the Price Index ceases to use 1982-84=100 as the
basis of calculation, or if a substantial change is made in the terms or
number of items contained in the Price Index, then the Price Index shall be
adjusted to the figure that would have been arrived at had the manner of
computing the Price Index in effect at the date of this lease not been
altered. In the event such Price Index (or a successor or substitute index)
is not available, a reliable governmental or other non-partisan publication
evaluating the information theretofore used in determining the Price Index
shall be used.
(c) Landlord will cause statements of the cost of living adjustments
provided for in subdivision (b) to be prepared in reasonable detail and
delivered to Tenant.
(d) In no event shall the fixed annual rent originally provided to be
paid under this lease (exclusive of the adjustments under this Article) be
reduced by virtue of this Article.
(e) Any delay or failure of Landlord, beyond July or January of any
year, computing or billing for the rent adjustments hereinabove provided,
shall not constitute a waiver of or in any way impair the continuing
obligation of Tenant to pay such rent adjustments hereunder.
(f) Notwithstanding any expiration or termination of this lease prior
to the lease expiration date (except in the case of a cancellation by mutual
agreement) Tenant's obligation to pay rent as adjusted under this Article
shall continue and shall cover all periods up to the lease expiration date,
and shall survive any expiration or termination of this lease.
TAX ESCALATION.
24. Tenant shall pay to Landlord, as additional rent, tax escalation in
accordance with this Article:
(a) For purposes of this lease the rentable square foot area of the
presently demised premises shall be deemed to be 453 square feet.
(b) Definitions: For the purpose of this Article, the following
definitions shall apply:
(i) The term "base tax year" as hereinafter set forth for the
determination of real estate tax escalation, shall mean the New York City
real estate tax year commencing July 1, 1998 and ending June 30, 1999.
(ii) The term "The Percentage", for purposes of computing tax
escalation, shall mean 11 percent (11%). The Percentage has been computed on
the basis of a fraction, the numerator of which is the rentable square foot
area of the demised premises and the denominator of which is the total
rentable square foot area of the office and commercial space in the building
project. The parties acknowledge and agree that the total rentable square
foot area of the office and commercial space in the building project shall be
deemed to be 408,582 sq. ft.
(iii) The term "the building project" shall mean the aggregate
combined parcel of land on a portion of which are the improvements of which
the demised premises form a part, with all the improvements thereon, said
improvements being a part of the block and lot for tax purposes which are
applicable to the aforesaid land.
(iv) The term "comparative year, shall mean the twelve (12)
months following the base tax year, and each subsequent Period of twelve (12)
months (or such other Period of twelve (12) months occurring during the term
of this lease as hereafter may be duly adopted as the tax year for real
estate tax purposes by the City of New York).
(v) The term "real estate taxes" shall mean the total of all
taxes and special or other assessments levied, assessed or imposed at any
time by any governmental authority upon or against the building project, and
also any tax or assessment levied, assessed or imposed at any time by any
governmental authority in connection with the receipt of income or rents from
said building project to the extent that same shall be in lieu of all or a
portion of any of the aforesaid taxes or assessments, or additions or
increases thereof, upon or against said building project. If, due to a future
change in the method of taxation or in the taxing authority, or for any other
reason, a franchise, income, transit, profit or other tax or governmental
imposition, however designated, shall be levied against landlord in
substitution in whole or in part for the real estate taxes, or in lieu of
additions to or increases of said real estate taxes, then such franchise,
income, transit, profit or other tax or governmental imposition shall be
deemed to be included within the definition of "real estate taxes" for the
purposes hereof. As to special assessments which are payable over a period of
time extending beyond the term of this lease, only a pro rata portion thereof
covering the portion of the term of this lease unexpired at the time of the
imposition of such assessment, shall be included in "real estate taxes". If
by law, any assessment may be paid in installments, then, for the purposes
hereof (a) such assessment shall be deemed to have been payable in the
maximum number of installments permitted by law and (b) there shall be
included in real estate taxes, for each comparative year in which such
installments may be paid, the installments of such assessment so becoming
payable during such comparative year, together with interest payable during
such comparative year.
(vi) Where more than one assessment is imposed by the City of New
York for any tax year, whether denominated an "actual assessment" or a
"transitional assessment" or otherwise, then the phrases herein "assessed
value" and "assessments" shall mean whichever of the actual, transitional or
other assessment is designated by the City of New York as the taxable
assessment for that tax year.
(vii) The phrase "real estate taxes payable during the base tax
year" shall mean that amount obtained by multiplying the assessed value of
the land and buildings of the building project for the base tax year by the
tax rate for the base tax year for each $100 of such assessed value.
(c) 1. In the event that the real estate taxes payable for any
comparative year shall exceed the amount of the real estate taxes payable
during the base tax year, tenant shall pay to landlord, as additional rent
for such comparative year, an amount equal to The Percentage of the excess.
Before or after the start of each comparative year, Landlord shall furnish to
Tenant a statement of the real estate taxes payable for such comparative
year, and a statement of the real estate taxes payable during the base tax
year. If the real estate taxes payable for such comparative year exceed the
real estate taxes payable during the base tax year, additional rent for such
comparative year, in an amount equal to The Percentage of the excess, shall
be due from Tenant to Landlord, and such additional rent shall be payable by
Tenant to Landlord within ten (10) days after receipt of the aforesaid
statement. 1be benefit of any discount for any earlier payment or prepayment
of real estate taxes shall accrue solely to the benefit of Landlord, and such
discount shall not be subtracted from the real estate taxes payable for any
comparative year.
Additionally, Tenant shall pay to Landlord, on demand, a sum equal to
The Percentage of any business improvement district assessment payable by the
building project.
2. Should the real estate taxes payable during the base tax year be
reduced by final determination of legal proceedings, settlement or otherwise,
then, the real estate taxes payable during the base tax year shall be
correspondingly revised, the additional rent theretofore paid or payable
hereunder for all comparative years shall be recomputed on the basis of such
reduction, and tenant shall pay to Landlord as additional rent, within ten
(10) days after being billed therefor, any deficiency between the amount of
such additional rent as theretofore computed and the amount thereof due as
the result of such recomputations. Should the real estate taxes payable
during the base tax year be increased by such final determination of legal
proceedings, settlement or otherwise, then appropriate recomputation and
adjustment also shall be made.
3. If after Tenant have made a payment of additional rent under this
subdivision (c), Landlord shall receive a refund of any portion of the real
estate taxes payable for any comparative year after the base tax year on
which such payment of additional rent shall have been based, as a result of a
reduction of such real estate taxes by final determination of legal
proceedings, settlement or otherwise, Landlord shall within ten (10) days
after receiving the refund pay to Tenant The Percentage of the refund less
The Percentage of expenses (including attorneys' and appraisers' fees)
incurred by Landlord in connection with any such application or proceeding.
If prior to the payment of taxes for any comparative year, Landlord shall
have obtained a reduction of that comparative year's assessed valuation of
the building project, and therefore of said taxes, then the term "real estate
taxes" for that comparative year shall be deemed to include the amount of
Landlord's expenses in obtaining such reduction in assessed valuation,
including attorneys' and appraisers' fees.
4. The statements of the real estate taxes to be furnished by Landlord
as provided above shall be certified by. Landlord and shall constitute a
final determination as between Landlord and Tenant of the real estate taxes
for the Periods represented thereby, unless Tenant within thirty (30) days
after they are furnished shall give a written notice to Landlord that it
disputes their accuracy or their appropriateness, which notice shall specify
the particular respects in which the statement is inaccurate or
inappropriate. If Tenant shall so dispute said statement then, pending the
resolution of such dispute, tenant shall pay the additional rent to Landlord
in accordance with the statement furnished by Landlord.
5. In no event shall the fixed annual rent under this lease (exclusive
of the additional rents under this Article) be reduced by virtue of this
Article.
6. If the commencement date of the term of this lease is not the first
day of the first comparative year, then the additional rent due hereunder for
such first comparative year shall be a proportionate share of said additional
rent for the entire comparative year, said proportionate share to be based
upon the length of time that the lease term will be in existence during such
first comparative year. Upon the date of any expiration or termination of
this lease (except termination because of Tenant's default) whether the same
be the date hereinabove set forth for the expiration of the term or any prior
or subsequent date, a proportionate share of said additional rent for the
comparative year during which such expiration or termination occurs shall
immediately become due and payable by Tenant to Landlord, if it was not
theretofore already billed and paid. The said proportionate share shall be
based upon the length of time that this lease shall have been in existence
during such comparative year. Landlord shall promptly cause statements of
said additional rent for that comparative year to be prepared and furnished
to lessee. Landlord and Tenant shall thereupon make appropriate adjustments
of amounts then owing.
7. Landlord's and Tenant's obligations to make the adjustments referred
to in subdivision (6) above shall survive any expiration or termination of
this lease.
8. Any delay or failure of lessor in billing any tax escalation
hereinabove provided shall not constitute a waiver of or in any way impair
the continuing obligation of lessee to pay such tax escalation hereunder.
SERVICES.
25. Tenant acknowledges that it has been advised that the cleaning
contractor for the building may be a division or affiliate of Landlord.
Tenant agrees to employ said contractor, or such other contractor as Landlord
may from time to time designate, for any waxing, polishing and other
maintenance work of the demised premises and of the Tenant's furniture,
fixtures and equipment, provided that the prices charged by said contractor
are comparable to the prices charged by other contractors for the same work.
Tenant agrees that it shall not employ any other cleaning and maintenance
contractor, nor any individual, firm or organization for such purpose without
Landlord's prior written consent. If Landlord and Tenant cannot agree on
whether the prices being charged by the contractor designated by the Landlord
are comparable to those charged by other contractors, Landlord and Tenant
shall each obtain two bona fide bids for such work from reputable
contractors, and the average of the four bids thus obtained shall be the
standard of comparison.
JURY WAIVER.
26. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim involving any matter whatsoever arising out of or
in any way connected with this lease, the relationship of landlord and
tenant, Tenant's use or occupancy of the premises (except for personal injury
or property damage) or involving the right to any statutory relief or remedy.
Tenant will not interpose any counterclaim of any nature in any summary
proceeding.
NO WAIVER, ETC.
27. No act or omission of Landlord or its agents shall constitute an
actual or constructive eviction, unless Landlord shall have first received
written notice of Tenant's claim and shall have had a reasonable opportunity
to meet such claim. In the event that any payment herein provided for by
Tenant to Landlord shall become overdue for a period in excess of ten (10)
days, then at Landlord's option a "late charge" shall become due and payable
to Landlord, as additional rent, from the date it was due until payment is
made at the following rates: for individual and partnership Tenants, said
late charge shall be computed at the maximum legal rate of interest; for
corporate or governmental entity Tenants the late charge shall be computed at
two percent per month unless there is an applicable maximum legal rate of
interest which then shall be used. No act or omission of Landlord or its
agents shall constitute an acceptance of a surrender of the premises, except
a writing signed by Landlord. The delivery of keys to Landlord or its agents
shall not constitute a termination of this lease or a surrender of the
premises. Acceptance by Landlord of less than the rent herein provided shall
at Landlord's option be deemed on account of earliest rent remaining unpaid.
No endorsement on any check, or letter accompanying rent, shall be deemed an
accord and satisfaction, and such check may be cashed without prejudice to
Landlord. No waiver of any provision of this lease shall be effective,
unless such waiver be in writing signed by Landlord. This lease contains the
entire agreement between the parties, and no modification thereof shall be
binding unless in writing and signed by the party concerned. Tenant shall
comply with the rules and regulations printed in this lease, and any
reasonable modifications thereof or additions thereto. Landlord shall not be
liable to Tenant for the violation of such rules and regulations by any other
tenant. Failure of Landlord to enforce any provision of this lease, or any
rule or regulation, shall not be construed as the waiver of any subsequent
violation of a provision of this lease, or any rule or regulation. This lease
shall not be affected by nor shall Landlord in any way be liable for the
closing, darkening or bricking up of windows in the premises, for any reason,
including as the result of construction on any property of which the premises
are not a part or by Landlord's own acts.
OCCUPANCY AND USE BY TENANT.
28(A). Tenant acknowledges that its continued occupancy of the demised
premises, and the regular conduct of its business therein, are of utmost
importance to the Landlord in the renewal of other leases in the building, in
the renting of vacant space in the building, in the providing of electricity,
air conditioning, steam and other services to the tenants in the building,
and in the maintenance of the character and quality of the tenants in the
building. Tenant therefore covenants and agrees that it will occupy the
entire demised premises, and will conduct its business therein in the regular
and usual manner, throughout the term of this lease. Tenant acknowledges that
Landlord is executing this lease in reliance upon these covenants, and that
these covenants are a material element of consideration inducing the Landlord
to execute this lease. Tenant further agrees that if it vacates the demised
premises or fails to so conduct its business therein, at any time during the
term of this lease, without the prior written consent of the Landlord, then
all rent and additional rent reserved in this lease from the date of such
breach to the expiration date of this lease shall become immediately due and
payable to Landlord.
(B) The parties recognize and agree that the damage to Landlord
resulting from any breach of the covenants in subdivision (A) hereof will be
extremely substantial, will be far greater than the rent payable for the
balance of the term of this lease, and will be impossible of accurate
measurement. The parties therefore agree that in the event of a breach or
threatened breach of the said covenants, in addition to all of Landlord's
other rights and remedies, at law or in equity or otherwise, Landlord shall
have the right of injunction to preserve Tenant's occupancy and use. The
words "become vacant or deserted" as used elsewhere in this lease shall
include Tenant's failure to occupy or use as by this Article required.
(C) If Tenant breaches either of the covenants in subdivision (A)
above, and this lease be terminated because of such default, then, in
addition to Landlord's rights of reentry, restoration, preparation for and
rerental, and anything elsewhere in this lease to the contrary
notwithstanding, Landlord shall retain its right to judgment on and
collection of Tenant's aforesaid obligation to make a single payment to
Landlord of a sum equal to the total of all rent and and additional rent
reserved for the remainder of the original term of this lease, subject to
future credit or repayment to Tenant in the event of any rerenting of the
premises by Landlord, after first deducting from rerental income all expenses
incurred by Landlord in reducing to judgment or otherwise collecting Tenant's
aforesaid obligation, and in obtaining possession of restoring, preparing for
and re-letting the premises. In no event shall Tenant be entitled to a credit
or repayment for rerental income which exceeds the sums payable by Tenant
hereunder or which covers a period after the original term of this lease.
NOTICES.
29. Any bill, notice or demand from Landlord to Tenant, may be
delivered personally at the premises or sent by registered or certified mail.
Such bill, notice or demand shall be deemed to have been given at the time of
delivery or mailing. Any notice from Tenant to Landlord must be sent by
registered or certified mail to the last address designated in writing by
Landlord.
WATER.
30. Tenant shall pay the amount of Landlord's cost for all water used
by Tenant for any purpose other than ordinary lavatory uses, and any sewer
rent or tax based thereon. Landlord may install a water meter to measure
Tenant's water consumption for all purposes and Tenant agrees to pay for
the installation and maintenance thereof and for water consumed as shown
on said meter. If water is made available to Tenant in the building or the
demised premises through a meter which also supplies other premises, or
without a meter, then Tenant shall pay to Landlord $ per month for
water.
SPRINKLER SYSTEM.
31. If there shall be a "sprinkler system" in the demised premises for
any period during this lease, Tenant shall pay $ per month, for
sprinkler supervisory service. If such sprinkler system is damaged by any
act or omission of Tenant or its agents, employees, licensees of visitors.
Tenant shall restore the system to good working condition at its own expense.
If the New York Board of Fire Underwriters, the New York Fire Insurance
Exchange, the Insurance Services Office or any governmental authority
requires the installation or any alteration to a sprinkler system by reason
of Tenant's occupancy or use of the premises, including any alteration
necessary to obtain the full allowance for a sprinkler system in the fire
insurance rate of Landlord, or for any other reason, Tenant shall make such
installation or alteration promptly, and at its own expense.
HEAT, ELEVATOR, ETC.
32. Landlord shall provide elevator service during all usual business
hours including Saturdays until 1 P.M., except on Sundays, State holidays,
Federal holidays, or Building service Employees Union Contract holidays.
Landlord shall furnish heat to the premises during the same hours on the same
days in the cold season in each year. Landlord shall cause the premises to be
kept clean in accordance with Landlord's customary standards for the
building, provided they are kept in order by Tenant. Landlord, its cleaning
contractor and their employees shall have after-hours access to the demised
premises and the use of Tenant's light, power and water in the demised
premises as may be reasonably required for the purpose of cleaning the
demised premises. Landlord may remove Tenant's extraordinary refuse from the
building and Tenant shall pay the cost thereof. If the elevator in the
building are manually operated, Landlord may convert to automatic elevators
at any time, without in any way affecting Tenant's obligations hereunder.
SECURITY DEPOSIT.
33. Tenant has deposited with Landlord the sum of $2400.00 security for
the performance by Tenant of the terms of this lease. Landlord may use any
part of the Security to satisfy any default of Tenant and any expenses
arising from such default, including but not limited to any damages or rent
deficiency before or after re-entry by Landlord. Tenant shall, upon demand,
deposit with Landlord the full amount so used, in order that Landlord shall
have the full security deposit on hand at all times during the term of this
lease. If Tenant shall comply fully with the terms of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
lease. In the event of a sale or lease of the building containing the
premises, Landlord may transfer the security to the purchaser or tenant, and
Landlord shall thereupon be released from all liability for the return of the
security. This provision shall apply to every transfer or assignment of the
security to a new Landlord. Tenant shall have no legal power to assign or
encumber the security herein described.
ELECTRICITY.
34. Terms and conditions with respect to electricity rent inclusion, or
with respect to sub-metering, as the case may be, and general conditions with
respect to either, are set forth in Article 41 in the Rider annexed to and
made part of this lease.
RENT CONTROL.
35. In the event the fixed annual rent or additional rent or any part
thereof provided to be paid by Tenant under the provisions of this lease
during the demised term shall become uncollectible or shall be reduced or
required to be reduced or refunded by virtue of any Federal, State, County or
City law, order or regulation, or by any direction of a public officer or
body pursuant to law, or the orders, rules, code or regulations of any
organization or entity formed pursuant to law, whether such organization or
entity be public or private, then Landlord, at its option, may at any time
thereafter terminate this lease, by not less than thirty (30) days' written
notice to Tenant, on a date set forth in said notice. in which event this
lease and the term hereof shall terminate and come to an end on the date
fixed in said notice as if the said date were the date originally fixed
herein for the termination of the demised term. Landlord shall not have the
right so to terminate this lease if Tenant within such period of thirty (30)
days shall in writing lawfully agree that the rentals herein reserved are a
reasonable rental and agree to continue to pay said rentals, and if such
agreement by Tenant shall then be legally enforceable by Landlord.
SHORING.
36. Tenant shall permit any person authorized to make an excavation on
land adjacent to the building containing the premises to do any work within
the premises necessary to preserve the wall of the building from injury or
damage, and Tenant shall have no claim against Landlord for damages or
abatement of rent by reason thereof
EFFECT OF CONVEYANCE, ETC.
37. If the building containing the premises shall be sold, transferred
or leased, or the lease thereof transferred or sold, Landlord shall be
relieved of all future obligations and liabilities hereunder and the
purchaser, transferee or tenant of the building shall be deemed to have
assumed and agreed to perform all such obligations and liabilities of
Landlord hereunder. In the event of such sale, transfer or lease, Landlord
shall also be relieved of all existing obligations and liabilities hereunder,
provided that the purchaser. transferee or tenant of the building assumes in
writing such obligations and liabilities.
RIGHTS OF SUCCESSORS AND ASSIGNS.
38. This lease shall bind and inure to the benefit of the heirs,
executors, administrators, successors, and, except as otherwise provided
herein, the assigns of the parties hereto. If any provision of any Article of
this lease or the application thereof to any person or circumstances shall,
to any extent, be invalid or unenforceable, the remainder of that Article, or
the application of such provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each provision of said Article and of this lease shall be valid
and be enforced to the fullest extent permitted by law.
CAPTIONS.
39. The captions herein are inserted only for convenience, and are in
no way to be construed as a part of this lease or as a limitation of the
scope of any provision of this lease.
SEE RIDER(S) ANNEXED HERETO AND MADE A PART HEREOF
IN WITNESS WHEREOF, Landlord and Tenant have executed this lease as of
the day and year first above written.
FISK BUILDING ASSOCIATES
By: HEMSLEY-SPEAR, INC.
By: /s/
SENIOR VICE-PRESIDENT
By: FAMOUS FIXIN S, INC.
By: /s/ Jason Bauer
<PAGE>
RIDER ANNEXED TO AND MADE A PART OF LEASE BETWEEN
FISK BUILDING ASSOCIATES LANDLORD
AND FAMOUS FIXINS, INC. TENANT
RULES AND REGULATIONS REFERRED
TO IN THIS LEASE
1. No animals, birds, bicycles or vehicles shall be brought into or
kept in the premises. The premises shall not be used for manufacturing or
commercial repairing or for sale or display of merchandise or as a lodging
place, or for any immoral or illegal purpose, nor shall the premises be used
for a public stenographer or typist; barber or beauty shop; telephone,
secretarial or messenger service; employment, travel or tourist agency;
school or classroom; commercial document reproduction; or for any business
other than specifically provided for in the tenant's lease. Tenant shall not
cause or permit in the premises any disturbing noises which may interfere
with occupants of this or neighboring buildings, any cooking or
objectionable odors, or any nuisance of any kind, or any inflammable or
explosive fluid, chemical or substance. Canvassing, soliciting and peddling
in the building are prohibited, and each tenant shall cooperate so as to
prevent the same.
2. The toilet rooms and other water apparatus shall not be used for any
purposes other than those for which they were constructed, and no sweepings,
rags, ink, chemicals or other unsuitable substances shall be thrown therein.
Tenant shall not throw anything out of doors, windows or skylights, or into
hallways, stairways or elevators, nor place food or objects on outside
window sills. Tenant shall not obstruct or cover the halls, stairways and
elevators, or use them for any purpose other than ingress and egress to or
from tenant's premises, nor shall skylights, windows, doors and transoms
that reflect or admit light into the building be covered or obstructed in
any way.
3. Tenant shall not place a load upon any floor of the premises in
excess of the load per square foot which such floor was designed to carry
and which is allowed by law. Landlord reserves the right to prescribe the
weight and position of all safes in the premises. Business machines and
mechanical equipment shall be placed and maintained by tenant, at tenant's
expense, only with Landlord's consent and in settings approved by Landlord
to control weight, vibration, noise and annoyance. Smoking or carrying
lighted cigars, pipes or cigarettes in the elevators of the building is
prohibited. If the premises are on the ground floor of the building the
tenant thereof at its expense shall keep the sidewalks and curb in front of
the premises clean and free from ice, snow, dirt and rubbish.
4. Tenant shall not move any heavy or bulky materials into or out of
the building without Landlord's prior written consent, and then only during
such hours and in such manner as Landlord shall approve. If any material or
equipment requires special handling, tenant shall employ only persons
holding a Master Rigger's License to do such work, and all such work shall
comply with all legal requirements. Landlord reserves the right to inspect
all freight to be brought into the building, and to exclude any freight
which violates any rule, regulation or other provision of this lease.
5. No sign, advertisement, notice or thing shall be inscribed, painted
or affixed on any part of the building, without the prior written consent of
Landlord. Landlord may remove anything installed in violation of this
provision, and Tenant shall pay the cost of such removal. Interior signs on
doors and directories shall be inscribed or affixed by Landlord at Tenant's
expense. Landlord shall control the color, size, style and location of all
signs, advertisements and notices. No advertising of any kind by Tenant shall
refer to the building, unless first approved in writing by Landlord.
6. No article shall be fastened to, or holes drilled or nails or screws
driven into, the ceilings, walls, doors or other portions of the premises,
nor shall any part of the premises be painted, papered or otherwise covered,
or in any way marked or broken, without the prior written consent of
Landlord.
7. No existing locks shall be changed, nor shall any additional locks
or bolts of any kind be placed upon any door or window by Tenant, without the
prior written consent of Landlord. At the termination of this lease, Tenant
shall deliver to Landlord all keys for any portion of the premises or
building. Before leaving the premises at any time, Tenant shall close all
windows and close and lock all doors.
8. No Tenant shall purchase or obtain for use in the premises any
spring water, ice, towels, food, bootblacking, barbering or other such
service furnished by any company or person not approved by Landlord. Any
necessary exterminating work in the premises shall be done at Tenant's
expense, at such times, in such manner and by such company as Landlord shall
require. Landlord reserves the right to exclude from the building, from 6:00
p.m. to 8:00 am., and at all hours on Sunday and legal holidays, all persons
who do not present a pass to the building signed by Landlord. Landlord will
furnish passes to all persons reasonably designated by Tenant. Tenant shall
be responsible for the acts of all persons to whom passes are issued at
Tenant's request.
9. Whenever Tenant shall submit to Landlord any plan, agreement or
other document for Landlord's consent or approval, Tenant agrees to pay
Landlord as additional rent, on demand, an administrative fee equal to the
sum of the reasonable fees of any architect, engineer or attorney employed by
Landlord to review said plan, agreement or document and Landlord's
administrative costs for same.
10. The use in the demised premises of auxiliary heating devices, such
as portable electric heaters, heat lamps or other devices whose principal
function at the time of operation is to produce space heating, is prohibited.
In case of any conflict or inconsistency between any provisions of
this lease and any of the rules and regulations as originally or as hereafter
adopted, the provisions of this lease shall control.
<PAGE>
RIDER ANNEXED TO AND MADE
PART OF A LEASE BETWEEN
FISK BUILDING ASSOCIATES, LANDLORD
AND FAMOUS FIXIN S.INC.TENANT
ELECTRICITY
41. Tenant agrees that Landlord may furnish electricity to Tenant on a
"submetering" basis or on a 11rent inclusion" basis". Electricity and
electric service, as used herein, shall mean any element affecting the
generation, transmission, and/or distribution or redistribution of
electricity, including but not limited to services which facilitate the
distribution of service.
(A). Submetering: If and so long as Landlord provides electricity to
the demised premises on a submetering basis, Tenant covenants and agrees to
purchase the same from Landlord or Landlord's designated agent at charges,
terms and rates set, from time to time, during the term of this lease by
Landlord but not more than those specified in the service classification in
effect on January 1, 1970 pursuant to which Landlord then purchased electric
current from the public utility corporation serving the part of the city
where the building is located; provided however, said charges shall be
increased in the same percentage as any percentage increase in the billing to
Landlord for electricity for the entire building, by reason of increase in
Landlord's electric rates or service classifications, subsequent to January
1, 1970, and so as to reflect any increase in Landlord's electric charges,
including changes in market prices for electricity from utilities and/or
other providers, in fuel adjustments, or by taxes or charges of any kind
imposed on Landlord 's electricity purchases or redistribution, or for any
other such reason, subsequent to said date. Any such percentage increase in
Landlord's billing for electricity due to changes in rates, service
classifications, or market prices, shall be computed by the application of
the average consumption (energy and demand) of electricity for the entire
building for the twelve (12) full months immediately prior to the rate and/or
service classification change, or any changed methods of or rules on billing
for same, applied on a consistent basis to the new rate and/or service
classification or market price, and to the service classification and rate in
effect on January 1, 1970. If the average consumption of electricity for the
entire building for said prior twelve (12) months cannot reasonably be
applied and used with respect to changed methods of or rules on billing, then
the percentage shall be computed by the use of the average consumption
(energy and demand) for the entire building for the first three (3) months
after such change, projected to a full twelve (12) months, so as to reflect
the different seasons; and that same consumption, so projected, shall be
applied to the service classification and rate in effect on January 1, 1970.
Where more than one meter measures the service of Tenant in the building, the
service rendered through each meter may be computed and billed separately in
accordance with the rates herein specified. Bills therefore shall be rendered
at such times as Landlord may elect and the amount, as computed from a meter,
shall be deemed to be, and be paid as, additional rent. In the event that
such bills are not paid within five (5) days after the same are rendered,
Landlord may, without further notice, discontinue the service of electric
current to the demised premises without releasing Tenant from any liability
under this lease and without Landlord or Landlord's agent incurring any
liability for any damage or loss sustained by lessee by such discontinuance
of service. If any tax is imposed upon Landlord's receipt from the sale,
resale or redistribution of electricity or gas or telephone service to Tenant
by any Federal, State, or Municipal authority, Tenant covenants and agrees
that where permitted by law, Tenant's pro-rata share of such taxes shall be
passed on to and included in the bill of, and paid by, Tenant to Landlord.
(B). Rent Inclusion: If and so long as Landlord provides electricity to
the demised premises on a rent inclusion basis, Tenant agrees that the fixed
annual rent shall be increased by the amount of the Electricity Rent
Inclusion Factor ("ERIF), as hereinafter defined. Tenant acknowledges and
agrees (1) that the the fixed annual rent hereinabove set forth in this lease
does not yet, but is to include an ERIF of $3.20 per rentable square foot to
compensate Landlord for electrical wiring and other installations necessary
for, and for its obtaining and making available to Tenant the redistribution
of electric current as an additional service; and (ii) that said ERIF, which
shall be subject to periodic adjustments as hereinafter provided, has been
partially based upon an estimate of the Tenant's connected electrical load,
in whatever manner delivered to Tenant, which shall be deemed to be the
demand (KW), and hours of use thereof, which shall be deemed to be the energy
(KVA7H), for ordinary lighting and light office equipment and the operation
of the usual small business machines, including Xerox or other copying
machines (such lighting and equipment are hereinafter called "Ordinary
Equipment") during ordinary business hours ("ordinary business hours" shall
be deemed to mean 50 hours per week), with Landlord providing an average
connected load of 4 1/2 watts of electricity for all purposes per rentable
square foot. Any installation and use of equipment other than Ordinary
Equipment and/or any connected load and/or energy usage by Tenant in excess
of the foregoing shall result in adjustment of the ERIF as hereinafter
provided. For purposes of this lease the rentable square foot area of the
presently demised premises shall be deemed to be 453 square feet. 9-a
If the cost to Landlord of electricity shall have been, or shall be,
increased or decreased subsequent to May 1, 1996 (whether such change occurs
prior to or during the term of this Lease), by change in Landlord's electric
rates or service classifications, or electricity charges, including changes
in market prices, or by any increase, subsequent to the last such electric
rate or service classification change or market price change, in fuel
adjustments or charges of any kind, or by taxes, imposed on Landlord's
electricity purchases or on Landlord's electricity redistribution, or for any
other such reason, then the aforesaid ERIF portion of the fixed annual rent
shall be changed in the same percentage as any such change in cost due to
changes in electric rates, service classifications or market prices, and,
also Tenant's payment obligation, for electricity redistribution, shall change
from time to time so as to reflect any such increase in fuel
adjustments or charges, and such taxes. Any such percentage change in
Landlord's cost due to change in Landlord's electric rates or service
classifications or market prices, shall be computed on the basis of the
average consumption of electricity for the building for the twelve full
months immediately prior to the rate change or other such changes in cost,
energy and demand, and any changed methods of or rules on billing for same,
applied on a consistent basis to the new electric rate or service
classification or market price and to the immediately prior existing electric
rate or service classification or market price. If the average consumption
(energy and demand) for the entire building for said prior (12) months cannot
reasonably be applied and used with respect to changed methods of or rules on
billing, then the percentage increase shall be computed by the use of the
average consumption (energy and demand) for the entire building for the first
three (3) months after such change, projected to a full twelve (12) months,
so as to reflect the different seasons; and that same consumption, so
projected, shall be applied to the rate and/or service classification or
market price which existed immediately prior to the change. The parties agree
that a reputable, independent electrical consultant firm, selected by
Landlord, ("Landlord's electrical consultant"), shall determine the
percentage change for the changes in ERIF due to Landlord's changed costs,
and that Landlord's electrical consultant may from time to time make surveys
in the demised premises of the electrical equipment and fixtures and use of
current. (i) If such survey shall reflect a connected electrical load in the
demised premises in excess of 41/2watts of electricity for all purposes per
rentable square foot and/or energy usage in excess of ordinary business hours
(each such excess hereinafter called "excess electricity") then the connected
electrical load and/or the hours of use portion(s) of the then existing ERIF
shall be increased by an amount which is equal to a fraction of the then
exisiting ERIF, the numerator of which is the excess electricity (i.e. excess
connected load and/or excess usage) and the denominator of which is the
connected load and/or the energy usage which was the basis of the then
existing ERIF Such fractions shall be determined by Landlord's electrical
consultant. The fixed annual rent shall then be appropriately adjusted,
effective as of the date of any such change in connected load and/or usage,
as disclosed by said survey. (ii) If such survey shall disclose installation
and use of other than Ordinary Equipment, then effective as of the date of
said survey, there shall be added to the ERIF portion of fixed annual rent
(computed and fixed as hereinbefore described) an additional amount equal to
what would be paid under the SC-4 Rate I Service Classification in effect on
May 1, 1996 (and not the time-of-day rate schedule) for such load and usage
of electricity, with the connected electrical load deemed to be the demand
(KW) and the hours of use thereof deemed to be the energy (KWH), as
hereinbefore provided, (which addition to the ERIF shall be increased or
decreased by all electricity cost changes of Landlord, as hereinabove
provided, from May 1, 1996 through the date of billing).
In no event, whether because of surveys, rates or cost changes, or for
any other reason, is the originally specified $3.20 per per rentable square
foot ERIF portion of the fixed annual rent (plus any net increase thereof,
but not decrease, by virtue of all electricity rate, service classification
or market price changes of Landlord subsequent to May 1, 1996) to be reduced.
(C). General Conditions: The determinations by Landlord's electrical
consultant shall be binding and conclusive on Landlord and Tenant from and
after the delivery of copies of such determinations to Landlord and Tenant,
unless, within fifteen (15) days after delivery thereof, Tenant disputes such
determination. If Tenant so disputes the determination, it shall, at its own
expense, obtain from a reputable, independent electrical consultant its own
determinations in accordance with the provisions of this Article. Tenant's
consultant and Landlord's consultant then shall seek to agree. If they cannot
agree within thirty (30) days they shall choose a third reputable electrical
consultant, whose cost shall be shared equally by the parties, to make
similar determinations which shall be controlling. (if they cannot agree on
such third consultant within ten (10) days, than either party may apply to
the Supreme Court in the County of New York for such appointment.) However,
pending such controlling determinations, Tenant shall pay to Landlord the
amount of additional rent or ERIF in accordance with the determinations of
Landlord's electrical consultant. If the controlling determinations differ
from Landlord's electrical consultant, then the parties shall promptly make
adjustment for any deficiency owed by Tenant or overage paid by Tenant.
At the option of Landlord, Tenant agrees to purchase from Landlord or
its agents all lamps and bulbs used in the demised premises and to pay for
the cost of installation thereof Supplementing Article 35 hereof, if all or
part of the submetering additional rent or the ERIF payable in acccordance
with Subdivision (A) or (B) of this Article becomes uncollectible or reduced
or refunded by virtue of any law, order or regulation, the parties agree
that, at Landlord's option, in lieu of submetering additional rent or ERIF,
and in consideration of Tenant's use of the building's electrical
distribution system and receipt of redistributed electricity and payment by
Landlord of consultant's fees and other redistribution costs, the fixed
annual rental rate(s) to be paid under this lease shall be increased by an
"alternative charge" which shall be a sum equal to $3.20 per year per
rentable square foot of the demised premises, changed in the same percentage
as any increases in the cost to Landlord for electricity for the entire
building subsequent to May 1, 1996, because of electric rate, service
classification or market price changes, such percentage change to be computed
as in Subdivision (B) provided.
Landlord shall not be liable to Tenant for any loss or damage or
expense which Tenant may sustain or incur if either the quantity or character
of electric service is changed or is no longer available or suitable for
Tenant's requirements. Tenant covenants and agrees that at all times its use
of electric current shall never exceed the capacity of existing feeders to
the building or wiring installation. Tenant agrees not to connect any
additional electrical equipment to the building electric distribution system,
other than lamps, typewriters and other small office machines which consume
comparable amounts of electricity, without Landlord's prior written consent,
which consent shall not be unreasonably withheld. Any riser or risers to
supply Tenant's electrical requirements, upon written request of Tenant, will
be installed by Landlord, at the sole cost and expense of Tenant, if, in
Landlord's sole judgment, the same are necessary and will not cause permanent
damage or injury to the building or demised premises or cause or create a
dangerous or hazardous condition or entail excessive or unreasonable
alterations, repairs or expense or interfere with or disturb other tenants or
occupants. In addition to the installation of such riser or risers, Landlord
will also at the sole cost and expense of Tenant, install all other equipment
proper and necessary in connection therewith subject to the aforesaid terms
and conditions. The parties acknowledge that they understand that it is
anticipated that electric rates, charges, etc., may be changed by virtue of
time-of-day rates or changes in other methods of billing, and/or electricity
purchases and the redistribution thereof, and fluctuation in the market price
of electricity, and that the references in the foregoing paragragraphs to
changes in methods of or rules on billing are intended to include any such
changes. Anything hereinabove to the contrary notwithstanding, in no event is
the submetering additional rent or EREF, or any "alternative charge", to be
less than an amount equal to the total of Landlord's payments to public
utilities and/or other providers for the electricity consumed by Tenant (and
any taxes thereon or on redistribution of same) plus 5% thereof for
transmission line loss, plus 15% thereof for other redistribution costs. The
Landlord reserves the right, at any time upon thirty (30) days' written
notice, to change its furnishing of electricity to Tenant from a rent
inclusion basis to a submetering basis, or vice versa, or to change to the
distribution of less than all the components of the existing service to
Tenant. The Landlord reserves the right to terminate the furnishing of
electricity on a rent inclusion, submetering, or any other basis at any time,
upon thirty (30) days' written notice to the Tenant, in which event the
Tenant may make application directly to the public utility and/or other
providers for the Tenant's entire separate supply of electric current and
Landlord shall permit its wires and conduits, to the extent available and
safely capable, to be used for such purpose, but only to the extent of
Tenant's then authorized load. Any meters, risers, or other equipment or
connections necessary to furnish electricity on a submetering basis or to
enable Tenant to obtain electric current directly from such utility and/or
other providers shall be installed at Tenant's sole cost and expense. Only
rigid conduit or electricity metal tubing (EMT) will be allowed. The Landlord,
upon the expiration of the aforesaid thirty (30) days' written
notice to the Tenant may discontinue furnishing the electric current but this
lease shall otherwise remain in full force and effect. If Tenant was provided
electricity on a rent inclusion basis when it was so discontinued, then
commencing when Tenant receives such direct service and as long as Tenant
shall continue to receive such service, the fixed annual rent payable under
this lease shall be reduced by the amount of the EW which was payable
immediately prior to such discontinuance of electricity on a rent inclusion
basis.
42. Lessor and Lessee represent that they each have not dealt with any person
other than Helmsley-Spear, Inc., 60 East 42nd Street, New York, New York in
connection with this transaction and each agrees to indemnify and hold the
other harmless from any damage suffered by such party through any breach of
this representation.
43. Change of Location:
A. Tenant covenants and agrees that Landlord shall have the absolute and
unqualified right upon notice to Tenant, to designate as the Demised Premises
that part of any other floor in the Building that approximately corresponds
to the premises demised hereunder, provided, however, (i) Landlord may
exercise this right only once during the Initial Term of this Lease. (ii)
such substituted space shall be the equivalent or better in the appearance of
the Demised Premises upon completion of Landlord's Initial Construction (wear
and tear, as well as damage to the Demised Premises caused by Tenant,
excepted) and (iii) Landlord shall move Tenant to the substituted space
during a single weekend. Such notice shall specify and designate the space so
substituted for the Demised Premises Notwithstanding such substitution of
space, this Lease and all terms, provisions, covenants and conditions
contained in this Lease shall remain and continue in full force and effect,
except that the Demised Premises shall be and be deemed to be such
substituted space (hereinafter called "Substituted Space"), with the same
force and effect as if the Substituted Space were originally specified in
this Lease as the premises demised hereunder.
B. In the event of the substitution of space as provided in Section 43.,
Tenant, upon six (6) months prior written notice, shall move to the
Substituted Space at Landlord's expense, and upon failure of Tenant to so
move to the Substituted Space, Landlord may, as Tenant's agent, remove Tenant
from the Demised Premises to the Substituted Space. Failure of Tenant to move
to the Substituted Space pursuant to this Lease Article 43 shall be deemed a
substantial breach of this Lease. Landlord shall reimburse Tenant for
Tenant's reasonable and necessary out-of-pocket expenses actually incurred
with regard to the move to the Substituted Space. Upon request from Landlord,
Tenant shall supply Landlord with satisfactory proof of out-of pocket
expenses incurred by Tenant in moving from the Demised Premises to the
Substituted Space.
C. Following such substitution of space (pursuant to this Article 43) if
any, Landlord and Tenant shall, promptly at the request of either party,
execute and deliver an agreement in recordable from setting forth such
substitution of space.
44. If and so long as Tenant is not in default under this lease beyond any
grace period, Tenant shall be entitled a total rent credit in the amount of
$1200.00. Said credit to be applied in one (1) monthly installment of
$1200.00 for the month of July 1998. Tenant shall nevertheless be obligated,
from and after the commencement date of the term, to pay additional rents
hereunder and to make payment of the ERIF portion of the fixed annual rent
due under Article #41 hereof, (anything in said Article #41 to the contrary
notwithstanding.)
Anything contained herein above to the contrary notwithstanding. If
Tenant at any time during the term of this Lease, breaches any material
covenant, condition or provision of this Lease and fails to cure such breach
within any applicable grace period then, in addition to all other damages and
remedies herein provided and to which Landlord may be otherwise entitled, to
the repayment in full of any rent credit theretofore enjoyed by Tenant which
repayment Tenant shall make upon demand therefore.
45. In the event Tenant hereafter shall require larger space during the term
of this Lease, and substitute space elsewhere in the building of
approximately 700 square feet or more becomes available for leasing by
Landlord (i.e., not than under offer to proposed tenant or subject to the
option of another tenant; and subject to the right of any existing tenant to
renew and extend its occupancy of such space, whether pursuant to an option
contained in its lease or otherwise), then if Tenant enters into a lease with
Landlord for such substitute space, at a rental and upon other terms and
conditions acceptable to Landlord, Tenant shall have the option to cancel
this Lease, effective as of the rent commencement date of the substitute
lease, provided Tenant gives Landlord at least thirty (30) days prior written
notice of its exercise of such cancellation option.
<PAGE>
46. RIDER ANNEXED TO AND MADE PART OF A LEASE BETWEEN
FISK BUILDING ASSOCIATES, LANDLORD
AND FAMOUS FIXINGS, INC. TENANT
Supplementing Articles 3 and 28 hereof:
ASSIGNMENT AND SUBLETTING
A. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it
shall not assign, mortgage or encumber this Lease, nor underlet, or suffer or
permit the demised premises or any part thereof to be used or occupied by
others, without the prior written consent of Landlord in each instance. If
this Lease be assigned, or if the demised premises or any part thereof be
underlet or occupied by anybody other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, undertenant or occupant,
and apply the net amount collected to the rent herein reserved, but no
assignment, underletting, occupancy or collection shall be deemed a waiver of
the provisions hereof, the acceptance of the assignee, undertenant or
occupant as tenant, or a release of Tenant from the further performance by
Tenant of covenants on the part of Tenant herein contained. The consent by
Landlord to an assignment or underletting shall not in any way be construed
to relieve Tenant from obtaining the express consent in writing of Landlord
to any further assignment or underletting. In no event shall any permitted
sublessee assign or encumber its sublease or further sublet all or any
portion of its sublet space, or otherwise suffer or permit the sublet space
or any part thereof to be used or occupied by others, without Landlord's
prior written consent in each instance. A modification, amendment or
extension of a sublease shall be deemed a sublease. if any lien is filed
against the demised premises or the building of which the same form a part
for brokerage services claimed to have been performed for Tenant, whether or
not actually performed, the same shall be discharged by Tenant within ten
(10) days thereafter, at Tenant's expense, by filing the bond required by
law, or otherwise, and paying any other necessary sums, and Tenant agrees to
indemnify Landlord and its agents and hold them harmless from and against any
and all claims, losses or liability resulting from such lien for brokerage
services rendered.
B. If Tenant desires to assign this Lease or to sublet all or any portion
of the demised premises, it shall first submit in writing to Landlord the
documents described in Section C hereof, and shall offer in writing, (i) with
respect to a prospective assignment, to assign this Lease to Landlord without
any payment of moneys or other consideration therefor, or, (ii) with respect
to a prospective subletting, to sublet to Landlord the portion of the demised
premises involved ("Leaseback Area") for the term specified by Tenant in its
proposed sublease and at the lower of (a) Tenant's proposed subrental or (b)
at the same rate of fixed rent and additional rent, and otherwise on the same
terms, covenants and conditions (including provisions relating to escalation
rents), as are contained herein and as are allocable and applicable to the
portion of the demised premises to be covered by such subletting. The offer
shall specify the date when the Leaseback Area will be made available to
Landlord, which date shall be in no event earlier than ninety (90) days nor
later than one hundred eighty (180) days following the acceptance of the
offer. If an offer of sublease is made, and if the proposed sublease will
result in all or substantially all of the demised premises being sublet, then
Landlord shall have the option to extend the term of its proposed sublease
for the balance of the term of this Lease less one (1) day.
Landlord shall have a period ninety (90) days from the receipt of such
offer to either accept or reject the same. If Landlord shall accept such
offer (i) Tenant shall then execute and deliver to Landlord, or to anyone
designated or named by Landlord, an assignment or sublease, as the case may
be, in either case in a form reasonably satisfactory to Landlord's counsel;
and (ii) if the proposed transaction is a sublease and Landlord accepts such
offer, Tenant, on demand, shall pay to Landlord or its managing agent (as
Landlord shall elect) an amount equal to the brokerage commissions which
would have been incurred by Tenant but for Landlord's accepting such offer.
If a sublease is so made it shall expressly:
(a) permit Landlord to make further subleases of all or any part of the
Leaseback Area and (at no cost or expense to Tenant) to make and authorize
any and all changes, alterations, installations and improvements in such
space as necessary;
(b) provide that Tenant will at all times permit reasonably appropriate
means of ingress to and egress from the Leaseback Area;
(c) negate any intention that the estate created under such sublease be
merged with any other estate held by either of the parties;
(d) provide that Landlord shall accept the Leaseback Area "as is"
except that Landlord, at Tenant's expense, shall perform all such work and
make all such alterations as maybe required physically to separate the
Leaseback Area from the remainder of the demised premises and to permit
lawful occupancy, it being intended that Tenant shall have no other cost or
expense in connection with the subletting of the Leaseback Area;
(e) provide that at the expiration of the term of such sublease Tenant
will accept the Leaseback Area in its then existing condition, subject to the
obligations of Landlord to make such repairs thereto as may be necessary to
preserve the Leaseback Area in good order and condition, ordinary wear and
tear excepted.
Landlord shall indemnify and save Tenant harmless from all obligations
under this Lease as to the Leaseback Area during the period of time it is so
sublet, except for fixed annual rent and additional rent, if any, due under
the within Lease, which are in excess of the rents and additional sums due
under such sublease.
Subject to the foregoing, performance by Landlord, or its designee,
under a sublease of the Leaseback Area shall be deemed performance by Tenant
of any similar obligation under this Lease and any default under any such
sublease shall not give rise to a default under a similar obligation
contained in this Lease, nor shall Tenant be liable for any default under this
Lease or deemed to be in default hereunder if such default is occasioned
by or arises from any act or omission of the tenant under such sublease or is
occasioned by or arises from any act or omission of any occupant holding
under or pursuant to any such sublease.
C. If Tenant requests Landlord's consent to a specific assignment or
subletting, it shall submit in writing to Landlord (i) the name and address
of the proposed assignee or sublessee, (ii) a duly executed counterpart of
the proposed agreement of assignment or sublease, (iii) reasonably
satisfactory information as to the nature and character of the business of
the proposed assignee or sublessee, and as to the nature of its proposed use
of the space, and (iv) banking, financial or other credit information
relating to the proposed assignee or sublessee reasonably sufficient to enable
Landlord to determine the financial responsibility and character of
the proposed assignee or sublessee.
D. If Landlord shall not have accepted Tenant's offer, as provided in
Section B, then Landlord will not unreasonably withhold or delay its consent
to Tenant's request for consent to such specific assignment or subletting,
where Tenant will not move the conduct of its business to another building in
New York City. Any such consent of Landlord shall be subject to the terms of
this Article and conditioned upon there being no default by Tenant, beyond
any grace period, under any of the terms, covenants and conditions of this
Lease at the time that Landlord's consent to any such subletting or
assignment is requested and on the date of the commencement of the term of
any such proposed sublease or the effective date of any such proposed
assignment.
E. Upon receiving Landlord's written consent (and unless theretofore
delivered to Landlord) a duly executed copy of the sublease or assignment
shall be delivered to Landlord within ten (10) days after execution thereof.
Any such sublease shall provide that the sublessee shall comply with all
applicable terms and conditions of this Lease to be performed by the Tenant
hereunder. Any such assignment of lease shall contain an assumption by the
assignee of all of the terms, covenants and conditions of this Lease to be
performed by the Tenant.
F. Anything herein contained to the contrary notwithstanding:
1. Tenant shall not advertise (but may list with brokers) its
space for assignment or subletting at a rental rate lower than the greater of
the then building rental rate for such space or the rental rate then being
paid by Tenant to Landlord.
2. The transfer of a majority of the issued and outstanding
capital stock of any corporate tenant or subtenant of this Lease or a
majority of the total interest in any partnership tenant or subtenant,
however accomplished, and whether in a single transaction or in a series of
related or unrelated transactions, shall be deemed an assignment of this
Lease or of such sublease. The transfer of outstanding capital stock of any
corporate tenant, for purposes of this Article, shall not include sale of
such stock by persons other than those deemed "insiders" within the meaning
of the Securities Exchange Act of 1934 as amended, and which sale is effected
through "over-the-counter market" or through any recognized stock exchange.
3. No assignment or subletting shall be made:
(a) To any person or entity which shall at that time be a tenant,
subtenant or other occupant of any part of the building of which the demised
premises form a part, or who dealt with Landlord or Landlord's agent
(directly or through a broker) with respect to space in the building during
the six (6) months immediately preceding Tenant's request for Landlord's
consent;
(b) By the legal representatives of the Tenant or by any person
to whom Tenant's interest under this Lease passes by operation of law, except
in compliance with the provisions of this Article;
(c) To any person or entity for the conduct of a business which
is not in keeping with the standards and the general character of the
building of which the demised premises form a part.
G. Anything hereinabove contained to the contrary notwithstanding, the
offer back to Landlord provisions of Section B hereof shall not apply to, and
Landlord will not unreasonably withhold or delay its consent to an assignment
of this Lease, or sublease of all or part of the demised premises, to the
parent of Tenant or to a wholly-owned subsidiary of Tenant or of said parent,
or to any corporation into or with which Tenant may be merged or
consolidated, provided that the net worth of the resulting corporation is at
least equal to the greater of (a) the net worth of Tenant on the date hereof or
(b) the net worth of Tenant immediately prior to such merger or
consolidation; provided, further, that any such assignment of Lease shall
contain an assumption by the assignee of all of the terms, covenants and
conditions of this Lease to be performed by the Tenant. Tenant agrees that no
such assignment or subletting shall be effective unless and until Tenant
gives Landlord written notice thereof, together with a true copy of the
assignment or of the sublease.
H. If Landlord shall not have accepted Tenant's offer and Tenant
effects such assignment or subletting, then Tenant thereafter shall pay to
Landlord a sum equal to (a) any rent or other consideration paid to Tenant by
any subtenant which (after deducting the costs of Tenant, if any, in
effecting the subletting, including reasonable alteration costs, commissions
and legal fees) is in excess of the rent allocable to the subleased space
which is then being paid by Tenant to Landlord pursuant to the terms hereof;
and (b) any other profit or gain (after deducting any necessary expenses
incurred) realized by Tenant from any such subletting or assignment. All sums
payable hereunder by Tenant shall be payable to Landlord as additional rent
upon receipt thereof by Tenant.
I. In no event shall Tenant be entitled to make, nor shall Tenant make,
any claim, and Tenant hereby waives any claim, for money damages (nor shall
Tenant claim any money damages by way of set-off, counterclaim or defense)
based upon any claim or assertion by Tenant that Landlord has unreasonably
withheld or unreasonably delayed its consent or approval to a proposed
assignment or subletting as provided for in this Article. Tenant's sole
remedy shall be an action or proceeding to enforce any such provision, or for
specific performance, injunction or declaratory judgment.
EXHIBIT 10.3
LICENSING AGREEMENT
THIS LICENSING AGREEMENT ("Agreement") is made as of the 1st day of
March, 1997 by and between Famous Fixins, Inc. ("Licensee"), a corporation
organized under the laws of the State of New York, having its principal place
of business at 300 West 72nd Street, Suite 4C, New York, New York 10023, and
Olympia Dukakis ("Licensor"), an individual of full age and majority,
residing in the State of New Jersey.
WHEREAS, Licensor has the sole and exclusive right to use and to
license others to use the name and likeness of Licensor, a popular performer
in the entertainment industry, for purposes of merchandising food products;
WHEREAS, Licensee manufactures celebrity-endorsed food products and
wishes to use the name and likeness of Licensor on and in connection with the
development, manufacture, distribution, promotion, and sale of Greek
specialty food products (the "Products");
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the exclusive
right to use the name, photograph, depiction, characterization, likeness,
voice, image, and biographical data of Licensor and the trademarks, logos,
copyrights and all other authorized material owned or controlled by Licensor
("Licensed Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Products (the "License"). This
License shall be effective worldwide from the date first stated above until
terminated in accordance with the terms and conditions of Paragraphs 9 or 10
of this Agreement; provided, however, that Licensor shall have the right to
renegotiate, and Licensee shall be obligated to negotiate in good faith, the
terms of this License in the event Licensee assigns this Agreement to any
wholly owned subsidiary, or to any person, firm, or corporation owning or
acquiring forty-two and one-half percent (42.5%) or more of Licensee's stock
or assets pursuant to Paragraph 12. In the event Licensor and Licensee are
unable to renegotiate the terms of this Agreement following good faith
negotiations, Licensor shall have the right to terminate this Agreement upon
sixty days written notice notwithstanding Paragraphs 9 and 10 of this
Agreement.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Products,
provided, however, that Licensee shall in its sole and absolute discretion
have the right to determine: (a) the type and quantity of Products developed
and manufactured; (b) the markets in which the Products are distributed and
sold; (c) the manner of distribution and sale of the Products; and (d) the
volume and nature of advertising for the Products. Licensee shall pay all
costs and expenses in connection with the development, production,
manufacturing, packaging, shipping, distribution, sales, and promotion of the
Products. All rights, titles, and interests in and to the Products, their
formulae and secret ingredients, and their packaging and labeling shall be,
and they are specifically and entirely, reserved to Licensee and may be fully
exploited without regard to the extent to which such rights may be
competitive with this Agreement or the rights granted hereunder. Licensee
shall reimburse Licensor for all out of pocket expenses incurred in
connection with pre-approved personal appearances and other promotional
activities undertaken by the Licensor on behalf of Licensee.
3. Licensor's Obligations. Licensor shall supply the Licensed
Subject Matter and personal appearance and services of Licensor for
television commercials, point of purchase, promotional, and display
materials, print media, outdoor and transit advertisements, and at sales
meetings, press conferences, dinners, receptions, and similar events at the
reasonable request of Licensee to assist in the promotion of the Products.
Licensor shall further furnish Licensee with sufficient information about her
schedule and performances to adequately plan its promotion and sales program
and shall ensure that all services by Licensor are rendered in a professional
manner to the best of her abilities and talents. Any and all publicity
regarding the Products shall be issued only by Licensee. Licensor may make
incidental reference to Licensee or the Products so long as it shall not be
the primary purpose of the publicity, provided that Licensor shall not make
any mention of Licensee, Licensee's products, or her engagement hereunder in
a derogatory manner, nor may Licensor disclose any trade secrets or
confidential information (including without limitation the terms of this
Agreement).
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacture of the Products. Licensee shall provide
Licensor with two production samples of the Products for Licensor's approval
as to quality before the Licensed Subject Matter is embodied on any
particular Product. Licensee shall further submit for Licensor's approval
the artwork, packaging design, advertising material, and all other materials
to be used in connection with the Products. Licensee agrees that it shall
not manufacture or sell the Products or use such materials without the prior
approval of Licensor. However, any sample or materials submitted to Licensor
which have not been disapproved in writing within 30 business days after its
receipt by Licensor shall be deemed to have been approved.
5. Compensation. In full and complete compensation to Licensor for
entering into and performing the terms and conditions of this Agreement, and
provided that Licensor completely performs her obligations hereunder,
Licensee shall pay Licensor a license fee (the "License Fee") in an amount
equal to five percent (5%) of all monies received by Licensee, whether in
cash or by check, note or other instrument (but if in other than cash, only
upon collection thereof), as revenue derived from sale of the Products (the
"Gross Receipts").
6. Accounting. Licensee shall render a detailed accounting to
Licensor on a quarterly basis within 60 days after the first day of January,
April, July, and October. Each accounting shall show both quarterly and
cumulative Gross Receipts for the Products and shall be accompanied by the
payment in full of the Licensee Fee then due to Licensor. Licensee shall
keep accurate books of account governing all transactions relating to the
Products, and Licensor, or her duly authorized representative, shall have the
right at any time, but in no event later than two (2) years after the date
that an accounting is rendered to Licensor, at her sole expense, to audit the
books and records of Licensee with respect to the sale of the Products upon
reasonable notice to Licensee and in a manner not to unreasonably interfere
with Licensee's business.
7. Insurance. Licensee may secure in its own name or otherwise, and
at its own expense, life, health, accident or other insurance covering
Licensor up to an amount of $ 1,000,000, and Licensor shall not have any
right, title, or interest in or to any such insurance. Licensor shall
reasonably assist Licensee in procuring such insurance by submitting to the
usual and customary medical and other examinations and to sign applications
and other instruments in writing as may be reasonably required by any
insurance company to which application for such insurance may be made.
8. Warranties and Representations. Licensor represents, warrants,
and covenants that (a) Licensor has the sole right, power and authority to
enter into and to perform this Agreement; (b) Licensor has not made, nor will
make, any agreement or commitment with any third party with respect to the
manufacture, distribution, promotion or sale of food products; (c) no rights
in the Products, their formulae and secret ingredients, or their packaging
and labeling are granted to Licensor and that Licensee reserves all rights
therein; and (d) Licensor shall cooperate fully with Licensee in the
execution, filing, and prosecution of any trademark or copyright application
that Licensee may choose to file.
9. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if: (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy; or (c) Licensee discontinues production
and distribution of the Products.
10. Licensee Termination. Licensee may terminate this Agreement upon
forty-five days written notice if (a) Licensor breaches a material term of
this Agreement and fails to remedy said breach within thirty (30) days of her
receipt of written notice of the breach; (b) Licensor becomes insolvent or
files a petition in bankruptcy; (c) Licensee determines in its sole and
absolute discretion to discontinue production and distribution of the
Products; (d) Licensor becomes the subject of public disrepute or scandal
that affects Licensor's image; or (e) Licensor dies or suffers any disability
impairing Licensor's ability to perform as an entertainer.
11. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgments, penalties, liabilities, damages,
costs, and expenses, including, without limitation, reasonable attorneys'
fees and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought, or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made
pursuant to this Agreement, or through the gross negligence or intentional
acts of its officers, directors, employees, or representatives.
12. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
substantial portion of Licensee's stock or assets.
13. Notices. Any notice to be hereunder shall be made in writing and
shall be sent by certified United States mail, return receipt requested,
postage prepaid. All notices to Licensor shall be sent to 222 Upper Mountain
Avenue, Montclair, New Jersey 07043. All notices to Licensee shall be sent to
300 West 72nd Street, Suite 4C, New York, New York 10023.
14. Relationship of the Parties. Nothing in this Agreement shall be
construed to (i) give either party the power to direct or control the day to
day activities of the other; (ii) constitute the parties as partners; joint
venturers, co-owners, or otherwise as participants in a joint and common
undertaking; or (iii) constitute Licensor, her agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create or assume any obligation on behalf of
Licensee for any purpose whatsoever.
15. Governing Law and Jurisdiction. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of the State of
New York. Both parties further consent to the personal jurisdiction of the
courts of the State of New York, whether state or federal, and agree that all
actions concerning, arising out of, or based upon this Agreement shall be
brought exclusively in a state or federal court located in the State of New
York. In the event of any action, suit, or proceeding concerning, arising
out of, or based upon this Agreement brought by either party against the
other, the prevailing party shall be entitled recover from the other its
reasonable attorneys' fees in connection therewith in addition to the costs
of such action, suit, or proceeding.
16. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter and
supersedes any and all negotiations, representations, or agreements between
the parties. No waiver, modification, or addition to this Agreement shall be
valid unless reduced to writing and signed by both parties. If any provision
of this Agreement shall be held void, voidable, invalid, or inoperative, no
other provision of this Agreement shall be affected as a result thereof, and,
accordingly, the remaining provisions of this Agreement shall remain in full
force and effect as though such void, voidable, invalid, or inoperative had
not been contained therein. Notwithstanding the foregoing, in the event and
provision held void, voidable, invalid, or inoperative impairs Licensee's
right to manufacture, distribute, promote, or sell Products, then this
Agreement shall be deemed to terminate.
IN WITNESS WHEREOF, the parties have executed this agreement in New
York, New York, on the 3rd day of November, 1997.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
---------------------
Jason Bauer, President
OLYMPLIA DUKAKIS
By: /s/ Olympia Dukakis
----------------------
Olympia Dukakis
EXHIBIT 10.4
AGREEMENT
AGREEMENT made this 9th day of February, 1999, by and between
STOCKPLAYER.COM., INC., a New York Corporation and FAMOUS FIXINS,INC., a New
York corporation.
WHEREAS, in accordance with Exhibit C to the Agreement dated February
9th 1999, Famous Fixins, Inc. is obligated to deliver 1,000,000 shares of its
common stock to StockPlayer.com, Inc. in consideration for promotional
services.
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Famous Fixins, Inc. agrees to transfer and assign 1,000,000 shares of
Common Stock to StockPlayer.com, Inc. in satisfaction of the payment
services to be performed under the above referenced Agreement dated
February 9, 1999.
2. Famous Fixins, Inc. acknowledges that it will be benefited by the
promotional services rendered by StockPlayer.com, Inc.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date first above written.
FAMOUS FIXINS
By: /s/ Jason Bauer
-----------------------------
STOCKPLAYER.COM, INC.
By: /s/ Vincent Napolitano
-----------------------------
<PAGE>
STOCKPLAYER.COM, INC. AGREEMENT
This StockPlayer.com, Inc. Agreement (the "Agreement") is entered into
on this 9th day of February, 1999 between StockPlayer.com, Inc., a New York
Corporation, and Famous Fixins, Inc. a New York corporation ("Client").
WHEREAS, StockPlayer.com, Inc. is in the business of planning,
developing, implementing, marketing and promotional campaigns for
corporations and other business entities ("Promotional Services");
WHEREAS, the Client desires to retain StockPlayer to provide the
Promotional Services, and StockPlayer desires to provide such Promotional
Services to Client, pursuant to the terms, conditions and provisions
contained in this Agreement for a period of five years.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Promotional Services. Subject to Client's compliance with each of the
representations, warranties and covenants and agreements made by Client
in this Agreement, StockPlayer agrees to provide to Client the
Promotional Services identified on Exhibit A which is attached hereto
and incorporated herein by reference, for the period commencing on the
latter of (the "Effective Date") the date that this Agreement is
executed and delivered by Client or the date that StockPlayer receives
payment of its fees as herein provided and expiring on the 365th day
following the effective date of this Agreement (the "Term").
2. Obligations and Responsibilities of Client. As of the date hereof and
during the Term of this Agreement, Client agrees as follows:
Representations and Warranties.
Client represents and warrants to StockPlayer that:
(A) Organization. Client is a corporation duly organized,
validly existing and in good standing under the laws of the
State of its incorporation and it is duly qualified to do
business as a foreign corporation in each jurisdiction in
which it owns or leases property or engages in business.
(B) Formal Action. Client has the corporate power and authority
to execute and deliver this Agreement and to perform each of
its obligations hereunder and this Agreement has been duly
approved by Client's Board of Directors.
(C) Valid and Binding Agreement. This Agreement has been duly
executed and delivered by Client and is the valid and binding
obligation of Client enforceable against it in accordance
with its terms.
(D) No Violation. The execution, delivery and performance of
this Agreement does not and will not violate any provisions
of the charter or bylaws of Client or any agreement to which
Client is a party or any applicable law or regulation or
order or decree of any court, arbitrator or agency of
government and no action of, or filing with, any governmental
or public body or authority is required in connection with
the execution, delivery or performance of this Agreement.
(E) Litigation. No action, suit or proceeding is pending against
or affecting the Client.
(F) Accuracy of Information. The information furnished by Client
to StockPlayer regarding the business, operations, financial
condition, including financial statements, business plans and
biographical information regarding the Client's directors and
officers (collectively referred to as the "Information
Package") is complete and accurate n all material respects
and does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they were not
misleading.
Covenants and Agreements.
Client covenants and agrees to comply with the following covenants:
(1) Client Certification. Client acknowledges that it is responsible
for the accuracy and completeness of the Information Package and for
all other information furnished to StockPlayer and for the accuracy and
completeness of the contents of all materials prepared by StockPlayer
for and on behalf of Client. The Client hereby designates the
individuals listed on Exhibit B attached hereto and incorporated herein
by reference as the duly authorized representatives of Client for
purposes of certifying to StockPlayer the accuracy of all documents,
advertisements or other materials prepared by StockPlayer for and on
behalf of Client. The Client agrees to promptly advise StockPlayer in
writing of any condition, event, circumstance or act that would
constitute a material adverse change in the business, properties,
financial condition or business prospects of the Client or which would
make any of the information contained in the Information Package or in
any report, advertorial or other document prepared by StockPlayer for
and on behalf of Client misleading in any material respect. Client
hereby agrees that StockPlayer and its directors, officers, agents and
employees may rely on the Information Package and on all other
information furnished by Client, and on each and every certification
provided by an authorized representative of Client, until StockPlayer
is advised in writing by an authorized representative of Client that
the information previously furnished to StockPlayer is inaccurate or
incomplete in any material respect. Client acknowledges that
StockPlayer shall have no obligation to provide services hereunder
until it has received a written certificate from an authorized
representative of Client as follows: StockPlayer shall prepare proofs
and/or tapes of the agreed upon materials and information, as set for
dissemination, for the Client's review and approval and Client shall
sign and return such materials marketing all corrections and changes
that the Client believes appropriate. Client acknowledges that
StockPlayer will make oral representations based on the information
furnished hereunder and the Client authorizes such representations.
(2) Books and Records. Client shall maintain true and complete books,
records and accounts in which true and correct entries shall be
made of its transactions in accordance with generally accepted
accounting principles consistently applied ("GAAP").
(3) Financial and Other Information. Client agrees to furnish to
StockPlayer the following information:
(A) Annual Financial Statements. As soon as practicable, and
in any event within 90 days after the close of the Client's fiscal
year, annual financial statements including a balance sheet, an
income statement, a statement of cash flows, and a statement of
stockholder's equity, and all notes thereto prepared in accordance
with GAAP and audited by an independent certified public
accountant.
(B) Quarterly Financial Statements. As soon as practicable, and in
any event within 45 days after the end of each fiscal
quarter, quarterly financial statements, including a balance
sheet, a quarterly and year-to-date income statement, a statement
of cash flows, and a statement of stockholder's equity, prepared
by Client in accordance with GAAP and certified by the chief
financial officer and chief executive officer of Client as fairly
presenting, subject to normal year-end audit adjustments, the
Client's financial position as of and for the periods indicated.
(4) StockPlayer Reliance on Client's Full Disclosure. Client will
provide, or cause to be provided, to StockPlayer all financial and
other information requested by StockPlayer for the purpose of
rendering its services pursuant to this Agreement. Client recognizes
and confirms that StockPlayer will use such information in performing
the services contemplated by this Agreement without independently
verifying such information and that StockPlayer does not assume any
responsibility for the accuracy or completeness of such information.
The persons executing this Agreement on behalf of Client certify that
there is no fact known to them which materially adversely affects or
may (so far as the Client's senior management can now reasonably
foresee) materially adversely affect the business, properties,
condition (financial or other) or operations (present or prospective)
of the Client which has not been set forth in written form delivered
by Client to StockPlayer. The persons executing this Agreement on
behalf of Client agree to keep StockPlayer promptly informed of any
facts hereafter know to Client which materially adversely affects or
may (so far as the Client's senior management can now reasonably
foresee) materially adversely the business, properties, condition
(financial or other) or operations (present or prospective) of Client.
(5) Legal Representation. Client acknowledges and agrees that it has been
and will continue to be, represented by legal counsel experienced in
corporate and securities laws and Client acknowledges that it has
been advised as to the obligations imposed on it pursuant to such laws
and understands that it will have the obligations and responsibility
to see that all such laws are complied with at all times during the
Term of this Agreement.
(6) Compensation. In consideration of the Promotional Services to be
performed by StockPlayer hereunder, StockPlayer hereby agrees to be
compensated in the manner and in the amount specified in Exhibit C
which is attached hereto and incorporated herein by reference thereto.
(7) Indemnity. Client acknowledges that it is responsible for the accuracy
of the Information Package and all other information provided to
StockPlayer and for the contents of all materials, advertorials and
other information prepared by StockPlayer for an on behalf of Client
as provided herein and Client agrees to indemnify StockPlayer in
accordance with the Indemnification Agreement set forth in Exhibit D,
which is attached hereto and incorporated herein by reference.
(8) Relationship of the Parties. This Agreement provides for the
providing of marketing and promotional services by StockPlayer to
Client and the provisions herein for compliance with financial
covenants, delivery of financial statements, and similar provisions are
intended solely for the benefit of StockPlayer to provide it with
information on which it may rely in providing services hereunder and
nothing contained in this Agreement shall be construed as permitting or
obligating StockPlayer to act as a financial or business advisor or
consultant to Client, as permitting or obligating StockPlayer to
participate in the management of client's business, as creating or
imposing any fiduciary obligations on the part of StockPlayer with
respect to the provisions of services hereunder and StockPlayer shall
have no such duty or obligation to client, as providing or counseling
Client as to the compliance by Client with any federal or state
securities or other laws affecting the services to be provided
hereunder. Or as creating any joint venture, agency, or other
relationship between the parties other than as explicitly and
specifically stated in this Agreement. The Client acknowledges
that it has had the opportunity to obtain the advice of experienced
counsel of its own choosing in connection with the negotiation and
execution of this Agreement, the provision of services hereunder and
with respect to all matters contained herein, including, without
limitation, the provisions of Section 4 hereof.
(9) Survival of Certain Provisions. The Client's obligations to pay the
fees and expenses of StockPlayer pursuant to Section 1 of this
Agreement and to comply with the indemnification provisions pursuant
to Exhibit D and shall remain operative and in full force and effect
regardless of any termination of this Agreement and shall be binding
upon, and shall inure to the benefit of, StockPlayer and, in the case
of the indemnify agreement, the persons, agents, employees, officers,
directors and controlling persons referred to in the Indemnification
Agreement, and their respective successors and assigns and heirs, and
no other person shall acquire or have any right under or by virtue of
this Agreement. All amounts paid or required to be paid under of this
Agreement shall be fully earned on the Effective Date of this Agreement
notwithstanding prior termination of this Agreement.
(10) Termination. StockPlayer shall have the right in its sole and absolute
discretion to terminate its obligations hereunder and to immediately
cease providing Promotional Services pursuant to this Agreement if
StockPlayer, in the exercise of its reasonable judgment, believes that
the representations and warranties made by Client hereunder are
inaccurate in any material respect or if Client breaches any of its
covenants and agreements contained herein or if any federal or state
governmental agency or instrumentality institutes an investigation or
suit against Client or pertaining to the services hereunder.
(11) Miscellaneous.
A. Governing Law. This Agreement shall be governed by the laws of
the State of New York.
B. Entire Agreement. This agreement and the Exhibits hereto embody
the entire agreement of the parties with respect to its subject
matter. There are no restrictions, promises, representations,
warranties, covenants, or undertakings other than those expressly
set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to its subject matter.
C. Amendments to be in Writing. This Agreement may be amended only
in a writing signed by all of the parties.
D. No Waivers by Course of Dealing; Limited Effect of Waivers. No
waiver shall be effective against any party unless it is in a
writing signed by that party. No course of dealing and no delay
on the part of StockPlayer in exercising its rights shall operate
as a waiver of that right or otherwise prejudice StockPlayer.
StockPlayer's failure to insist upon the strict performance of
any provision of this Agreement, or to exercise any right or
available to StockPlayer, shall not constitute a waiver by
StockPlayer of such provision. No specific waiver by StockPlayer
of any specific breach of any provision of this Agreement shall
operate as a general waiver of the provision or of any other
breach of the provision. Client shall have no right to cure any
breach except as specifically provided herein.
E. Counterparts. This Agreement may be executed in multiple
Counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
F. Circulation of Rights and Remedies. No right or remedy of
StockPlayer under this Agreement is intended to preclude any
other right or remedy and every right and remedy shall coexist
with every other right and remedy now or hereafter existing
whether by contract, at law, or in equity.
G. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties and their successors
and assigns. Client shall not have any right to assign any of
its rights or delegate any of its obligations or responsibilities
under this Agreement except as expressly stated herein.
H. Payment of Fees and Expenses on Enforcing Agreement. In the
event of any dispute between the parties arising out of or
related to this Agreement or the interpretation thereof, at the
trial level or appellate level, the prevailing party shall be
entitled to recover from the non-prevailing party all costs and
expenses, including reasonable fees and disbursements of counsel
which may be incurred in connection with such proceeding, without
limitation, including any costs and expenses of experts,
witnesses, depositions and other costs.
I. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing, and shall be given to
the parties at the addresses set forth below (or to such other
addresses as the parties may specify by due notice to the
others). Notices or other communications shall be effective when
received at the recipient's location (or when delivered to that
location if receipt is refused). Notices or other communications
given by facsimile transmission shall be presumed received at the
time indicated in the recipient's automatic acknowledgement.
Notices or other communications given by certified mail, return
receipt requested, postage prepaid, shall be presumed received 3
business days after the date of Mail.
Client: Famous Fixins, Inc.
250 West 57th Street
Suite 2501
New York, NY 10107
StockPlayer: StockPlayer.com, Inc.
100 Quentin Roosevelt Blvd., Suite 202
Garden City, New York 11530
Attn: Mr. Vincent Napolitano
(516)357-9550
J. Heading. The headings in this Agreement are intended solely for
conveniences of reference. They shall be given no effect in the
construction or interpretation of this Agreement.
K. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not impair the validity of
enforceability of any other provision.
In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
Attest: FAMOUS FIXINS, INC.
By: By: /s/ Jason Bauer
[Corporate Seal] -------------------------
Attest: STOCKPLAYER.COM., INC.
By: By: /s/ Vincent Napolitano
[Corporate Seal]
<PAGE>
Exhibit A
Promotional Services
The services to be provided are as follows:
The services that shall be provided to Famous Fixins, Inc. will be
designed to assist the Company disseminating information concerning the
Company's business to the investing public by use of the Internet, radio and
magazine hard copy. This Agreement will be for a period of five years.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement regarding the service to be provided by StockPlayer
under the Agreement.
FAMOUS FIXINS, INC.
By: /s/Jason Bauer
---------------------------
STOCKPLAYER.COM., INC.
By: /s/ Vincent Napolitano
---------------------------
<PAGE>
EXHIBIT B
Client hereby designates the following person or persons to act on its behalf
of the Agreement.
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
<PAGE>
EXHIBIT C
COMPENSATION
1. Famous Fixins, Inc. agrees to issue StockPlayer 1,000,000 shares of
Common Stock in Client (the "Shares") which Shares shall be duly and
validly issued, fully paid and nonassessable and shall not be issued in
violation of any preemptive right of any stockholders of client. The
Shares shall be issued in compliance with the exemption from the
registration requirements of the Securities Act of 1933 (the "Act")
and/or pursuant to Rule 504 of the General Rules and Regulation under
the Securities Act of 1933.
2. Client acknowledges that the consideration to be paid to StockPlayer
shall be fully earned on the date that StockPlayer commences providing
services under the Agreement regardless of whether the Agreement is
terminated as provided in the Agreement prior to completion of all
services.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement to the compensation provisions contained herein.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
---------------------------
STOCKPLAYER.COM, INC.
By: /s/ Vincent Napolitano
---------------------------
<PAGE>
EXHIBIT D
INDEMNIFICATION
This Indemnification Agreement constitutes part of theStockPlayer.com,
Inc. (the Agreement) dated February 9, 1999 between Client (as defined in the
Agreement) and StockPlayer.
Client acknowledges and agrees that if, in connection with the services
or matters that are the subject of or arise out of such Agreement,
StockPlayer becomes involved (whether or not as a named party) in any action,
claim or legal proceeding (including any governmental inquiry or
investigation), Client agrees to reimburse StockPlayer for its reasonable
legal fees, disbursements of counsel and other expenses (including the cost
of investigation and preparation) as they are incurred by StockPlayer, Client
also agrees to indemnify and hold StockPlayer harmless against any losses,
claims damages, or liabilities, joint or several, as incurred, to which
StockPlayer may become subject in connection with the services or matters
which are the subject of or arise out of the Agreement; provided, however,
that Client shall not be liable under the foregoing indemnify in respect of
any loss, claim, damage or liability to the extent that a court having
jurisdiction shall have determined by a final judgment that such loss, claim,
damage or liability is a consequence of intentional fraudulent acts committed
by StockPlayer without the knowledge and/or consent of Client. In the event
that the foregoing indemnify is unavailable by operation of law, then Client
shall contribute to amounts paid or payable by StockPlayer in respect of such
losses, claims, damages and liabilities in the proportion that Client's
interest bears to StockPlayer's interest in the matters contemplated by the
Agreement. If, however, the allocation provided immediately preceding
sentence is not permitted by applicable law, or otherwise, then Client shall
contribute to such amount paid or payable by StockPlayer in such proportion
as is appropriate to reflect not only such relative interests but also the
relative fault of Client on the one hand and StockPlayer on the other hand in
connection with the matters as to which such losses, claims, damages or
liabilities relate and other equitable considerations.
Promptly after StockPlayer's receipt of notice of the commencement of
any action or of any claim, StockPlayer will, if a claim in respect thereof
is to be made against Client under this Indemnify Agreement, notify Client of
the commencement thereof. In case any such actin or claim is brought against
StockPlayer, Client will be entitled to participate therein and, to the
extent that Client may wish, to assume the defense thereof, with counsel
satisfactory to StockPlayer. After notice from Client to StockPlayer of
Client's election to so assume the defense thereof, Client will not be liable
to StockPlayer for indemnification as provided in the preceding paragraph for
any legal fees, disbursements of counsel or other expenses subsequently
incurred by StockPlayer in connection with the defense thereof other than
reasonable costs of investigation; provided that StockPlayer shall have the
right to employ separate counsel if, in the reasonable judgment of
StockPlayer's counsel, it is advisable for StockPlayer to be represented by
separate counsel or if in the reasonable judgement of StockPlayer's counsel,
Client not vigorously and actively defending against any such claim or
claims, and in either such event the reasonable legal fees and disbursements
of such separate counsel shall be paid by Client.
The foregoing agreements shall apply to any modification of the
Agreement, shall remain in full force and effect following the completion or
termination of StockPlayer engagement under the Agreement and shall be in
addition to any rights that StockPlayer may have at common law or otherwise.
The agreements in this Indemnification Agreement shall extend to and inure to
the benefit of each person, if any, who may be deemed to control StockPlayer,
be controlled by StockPlayer or be under common control with StockPlayer and
to StockPlayer's, and to cash such other person's respective affiliates,
directors, officers, employees and agents. This indemnification Agreement
shall be binding on any successor of Client.
Client represents that the Indemnification Agreement contained herein
is the legal, valid, binding and enforceable obligation of Client,
enforceable against Client according to its terms.
This Indemnification Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to
principles of conflicts of law, and the forum for resolution of legal and
interpretive issues shall be the Federal District courts in the State of New
York.
The parties hereto by signing this Exhibit in the space provided below
signify their agreement to the indemnification provisions contained herein.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
---------------------------
STOCKPLAYER.COM, INC.
By:
---------------------------
EXHIBIT 10.5
December 7, 1998
Marketing Agreement
Crown Prince, Inc. and Famous Fixins, Inc.
Crown Prince will provide the following on behalf of Famous Fixins:
1. Consultation with and oversight from the Crown Prince Director of Sales
and Marketing, and the National Field Sales Manager to recommend distribution
strategy and supervision of implementation.
2. The services of all Crown Prince Regional Sales Managers and their
existing broker network, with the exception of brokers listed in "Attachment
A", to implement the agreed upon plans and oversee the continuing operation.
3. Administrative support from Crown Prince headquarters for order
forwarding, price and promotion monitoring, and broker liaison activities.
4. Marketing support to include dissemination of prepared materials and
coordination of notice to regional managers and brokers.
5. Ninety day transition period in the event that this contract is
terminated by Crown Prince to allow for orderly transfer of duties to a new
representative.
6. The fulfillment of all customer service expectations to avoid damaging
the excellent reputation enjoyed by Famous Fixins within our industry.
Famous Fixins agrees to the following:
1. Representation by Crown Prince to all U.S. Markets, whether or not
distribution currently exists.
2. Jason Bauer or one of his nominees will provide: presentation
assistance to all regions, consultation with Crown Prince management, and
decision-making with regard to marketing expenditures, etc.
3. A commission rate to be paid as follows on net sales:
Olympia Dukakis Greek Salad Dressings 7%
Erik Estrada Gourmet Chips To Be Determined
A minimum commission rate of 3% for management to be included for all
lines regardless of distribution channels.
4. To provide an outline of distribution objectives and volume
expectations within a predetermined time interval, with incentives tied to
accomplishment. Objectives and expectations to be reviewed annually.
5. Ninety day transition period to protect Crown Prince from arbitrary
termination of the contract on the part of Famous Fixins.
6. The fulfillment of all customer service expectations to avoid damaging
the excellent reputation enjoyed by Crown Prince within our industry.
Crown Prince reserves the right to modify or enhance this agreement in the
event that extraordinary circumstances dictate a change. Although
enumeration of such circumstances is impossible, prior experience allows us
to list at least the following:
1. To invoice Famous Fixins for miscellaneous costs above routine
expectations. These would include unusual levels of phone/fax charges,
shipping/handling charges, storage costs, or other extraordinary expenditures
that may be encountered.
2. To review compensation agreement at any time to address additional
costs that may be incurred strictly on behalf of Famous Fixins.
3. To render unilateral decisions regarding broker and distributor
appointments, and the assignment of regional responsibility.
4. To commit expenditures mutually agreed upon in advance.
5. To set fees for various administrative tasks performed by Crown Prince
where required by Famous Fixins to maintain a satisfactory level of service
to accounts. Examples would include invoicing, shipping and inventory
management.
Additional Considerations:
Crown Prince agrees to a thirty day notice of termination in the event
that performance objectives and expectations are not met.
This agreement goes into effect immediately.
12-7-98 12/7/98
- ------------------------ --------------------------
Date Date
/s/ Jason Bauer /s/ Robert Hoffman
- ------------------------ --------------------------
Jason Bauer, President Robert Hoffman, President
Famous Fixins, Inc. Crown Prince, Inc.
<PAGE>
December 7, 1998
Marketing Agreement
Crown Prince, Inc. and Famous Fixins, Inc.
Attachment A
Crown Prince agrees to keep the following brokers intact for a six
month trial period commencing January 1, 1999. This trial period may be
terminated or modified by Jason Bauer only. At the end of the trial period
these brokers will come under the regular terms of the marketing agreement.
LP Sales and Marketing
New England Marketing Area
Kenney Sales
Baltimore/Washington Marketing Area
B & D Sales and Marketing
New York Metro Marketing Area
12-7-98 12/7/98
- ------------------------ --------------------------
Date Date
/s/ Jason Bauer /s/ Robert Hoffman
- ------------------------ --------------------------
Jason Bauer, President Robert Hoffman, President
Famous Fixins, Inc. Crown Prince, Inc.
EXHIBIT 10.6
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
[Letterhead of The Tufton Group]
April 1, 1999
Mr. Jason Bauer
President
Famous Fixins, Inc.
250 West 57th St. Ste. 2501
New York, N.Y. 10107
Re: The Tufton Group/Famous Fixins
Dear Jason:
This letter will confirm the Agreement between The Tufton Group
("Tufton") and Famous Fixins, Inc., under the terms of which Tufton will
furnish the name and likeness of Calvin E. Ripken, Jr. ("Ripken"). The
Agreement is as follows,
1. This Agreement shall commence as of April 1, 1999 and end on
April 1, 2000, unless Famous Fixins sells One Million (1,000,000) units of
the Product (Cal's Classic O's), in which case the Agreement automatically
extends for another year, until April 1, 2001.
2. The Licensed Product ("Product") will include the design,
manufacture, packaging, merchandising, distribution and sale of Cal's Classic
O's Honey Nut Toasted Oat Cereal and related merchandise sold on the back
panel. Famous Fixins shall not use the Licensed Property for any other
purpose other than as expressly herein defined and shall not use the Licensed
Property to endorse any product or service other than the Licensed Product.
3. Tufton hereby grants to Famous Fixins the non-exclusive right,
license, and privilege to utilize the name, picture, visual representation,
biography, performance statistics, facsimile signature, nickname and
photographic image of Ripken for use on the Product.
<PAGE>
4. Tufton shall have final and absolute approval of the Product and
of all advertising, packaging and promotional material to be used during all
stages of the development thereof. Famous Fixins agrees to furnish Tufton
(via certified mail or Federal Express), free of cost, at least thirty (30)
business days before the release of the Product [and advertising related to
the Product] to the general public, samples of the Product, as well as
samples of all advertising and promotions that display or picture Ripken. If
a response is not received by Famous Fixins within ten (10) business days
following receipt of the samples, the samples shall be deemed approved. All
samples will be sent to Ira S. Rainess, The Tufton Group, 2330 West Joppa
Poad, Suite 333, Lutherville, Maryland 21093.
5. A. During the term of this Agreement, Famous Fixins shall have
the right to sell the Product as well as publish all printed and promotional
materials outlined hereunder, but only in the following geographical
marketing area: The World. However, this geographical market may be limited
by any third party contracts entered into by Famous Fixins including but not
limited to Major League Baseball.
B. Upon expiration or termination, no use or re-use of the
Product, advertising, or promotional materials produced hereunder will be
made without the express written consent of Tufton.
6. A. Famous Fixins agrees to pay Tufton ***** Percent
(*****%) of Gross Sales derived from Cal's Classic O's, less slotting
fees. All royalties due to Tufton will be paid to Tufton within
thirty (30) days after the end of each calendar quarter.
B. Famous Fixins shall pay to Tufton ***** Percent
(*****%) of net profits from the sale of all related
merchandise advertised on the back panel. All royalties due to
Tufton will be paid to Tufton within thirty (30) days of the end of
each calendar quarter.
C. Famous Fixins shall issue Tufton warrants exercisable
into ***** shares of Famous Fixins stock at an exercise price of
***** ($*****) per share, exercisable for up to Five (5) years
from the start of this Agreement, April 1, 1999.
D. Famous Fixins will donate one side panel of the
cereal box for a personal message from The Kelly & Cal Ripken, Jr.
Foundation with information for the public to contact the
foundation for additional donations.
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
E. If Famous Fixins sells at least one million
(1,000,000) units of the product and the contract automatically
extends for another year, Famous Fixins shall issue Tufton
additional warrants exercisable into ***** shares of Famous Fixins
stock at an exercisable price of ***** ($*****) per share,
exercisable for up to Five (5) years.
7. A. Tufton shall have the right to terminate this Agreement
upon written notice, by the occurrence of any one or more of the following
events (herein called ("Defaults"), and Famous Fixins failure to cure any
Default completely within fifteen (15) business days from Famous Fixins
receipt of written notice from Tufton specifying the nature of such Default:
(i) If Famous Fixins fails to make any payment due hereunder on
the date due;
(ii) If Famous Fixins fails to deliver the statements when due;
(iii) If Famous Fixins at any time breaches any material term of
this Agreement.
If Tufton terminates this Agreement pursuant to this section, all
rights, licenses, and privileges granted to Famous Fixins hereunder shall
automatically revert to Tufton and Famous Fixins shall cease manufacturing
and sales of the Product. Any and all payments and all inventory of the
Product shall become promptly due and payable in full to Tufton.
B. Famous Fixins shall have the right to terminate this
Agreement upon written notice, by the occurrence of a material breach by
Tufton and Tufton's failure to cure such breach within five (5) business days
from Tufton's receipt of written notice from Famous Fixins specifying the
nature of such default.
8. Tufton shall have the right to inspect the books and records of
Famous Fixins regarding the Product upon reasonable notice.
9. Famous Fixins shall furnish to Tufton within Thirty (30) days
after each calendar quarter, a complete and accurate statement of accounting
showing the description/design and gross sales of the Product during the
preceding calendar quarter and for the project to date.
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
10. Whenever notice, payment, or other submissions are required to be
given to Ripken under this Agreement, such notices shall be sent to the
following address: Ira Rainess, The Tufton Group, 2330 West Joppa Road,
Suite 333, Lutherville, Maryland 21093.
Whenever submissions are required to be given to Famous Fixins
under this Agreement, such notices shall be sent to the following address:
Jason Bauer, Famous Fixins, Inc., 250 W. 57th St., Suite 2501, New York, New
York, 10107.
11. Famous Fixins acknowledges that the rights to be granted pursuant
to this Agreement are subject to a previous and ongoing grant of rights to
the Major League Baseball Player's Association. Famous Fixins further
acknowledges that the rights granted hereunder do not include the rights
referred to in this paragraph. Famous Fixins hereby covenants, that it will,
at its own expense, obtain all rights from third parties that will be
necessary, including but not limited to, the right to use the "Orioles" or
other team logo, insignia, and other team related rights or intangible
property.
12. Famous Fixins hereby covenants and agrees to defend, indemnify
and hold Tufton and Ripken jointly and severally harmless from and against
any claims, losses, suits, liabilities, obligations, costs and expenses
(including reasonable attorneys' fees) arising, in any way, out of or in
connection with this Agreement, all materials prepared by Famous Fixins under
the terms of this Agreement, the use of such materials, the transmission,
publication, and/or broadcasting of such materials, or the provision of any
of Famous Fixins services,
13. Famous Fixins agrees to maintain, at Famous Fixins own cost and
expense, comprehensive general liability, insurance from an insurance company
acceptable to Tufton and Ripken, providing adequate protection for Tufton and
Ripken, against any claims or suits arising out of or in connection with this
Agreement, in an amount no less than ONE MILLION DOLLARS ($1,000,000.00) per
incident or occurrence, or Famous Fixins standard insurance policy limits,
whichever is greater. Within fifteen (15) days from the date hereof, Famous
Fixins will submit to Tufton and Ripken a fully paid policy or certificate of
insurance, naming Tufton and Ripken as additional insured parties and
requiring that the insurer shall not terminate or materially modify such
policy or certificate of insurance without written notice to Tufton and
Ripken at least thirty (30) days in advance thereof.
<PAGE>
14. Upon expiration or termination of this Agreement, Famous Fixins
shall have one hundred ten (110) days to dispose of and liquidate all
inventory of the Product, unless stated otherwise herein. The inventory
shall not be available to the consumers after the one hundred ten (110) day
period. At which time, all remaining inventory shall be delivered
immediately, at Famous Fixins expense, to the Tufton Group along with all
royalties accrued to such time, as well as a final accounting report.
15. In the event a dispute or controversy arises under this agreement
which cannot be resolved first through good faith negotiations, such dispute
or controversy shall be submitted to arbitration and resolved by a single
arbitrator (who shall be a lawyer) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect.
All such arbitration shall take place at the office of the American
Arbitration Association located in or closest to Baltimore, Maryland. Each
party is entitled to depose one (1) fact witness and any expert witness
retained by the other party, and to conduct such other discovery as the
arbitrator deems appropriate. The arbitrator has the authority to award
attorneys' fees. The award or decision by the arbitrator shall be final,
binding, and conclusive, and judgment may be entered upon such award by any
court of law.
16. This agreement shall be governed by, and its provisions construed
in accordance with, the laws of the State of Maryland.
17. Notwithstanding anything to the contrary herein, in the event
Famous Fixins incurs any expenses, damages or other liabilities, (including,
without limitation, reasonable attorney's fees and court costs) in connection
with the breach of any term or provision hereof, Tufton's and Ripken's
liability to Famous Fixins shall not exceed the fees actually paid under the
terms hereunder. UNDER NO CIRCUMSTANCES WILL TUFTON OR RIPKEN BE LIABLE TO
FAMOUS FIXINS FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT DAMAGES, LOSS OF GOOD
WILL OR BUSINESS PROFITS, OR EXEMPLARY OR PUNITIVE OR ANY OTHER DAMAGES.
18. Famous Fixins represents and warrants that Famous Fixins has the
legal right, authority, and capacity to enter into this agreement and to make
the representations herein. This includes, but is not limited to, Famous
Fixins assurances that Famous Fixins has acquired all necessary licenses and
rights, at Famous Fixins expense, required to manufacture the Product.
Tufton represents and warrants that Tufton has the legal right,
authority, and capacity to enter into this agreement and to make the
representations herein.
<PAGE>
19. This agreement shall be binding upon the parties, their partners,
successors, assigns and legal representatives. This agreement shall not be
assigned or transferred by either party without the prior written consent of
the other party. If either party hereto attempts to make such an assignment
without consent, that party shall nevertheless remain legally responsible for
all obligations under this agreement.
20. Ripken and Famous Fixins are independent contractors under this
agreement, and it is not their intent to form any agency relationship,
partnership or joint venture. Except as specifically provided in this
agreement, each party will exercise full power and authority to select the
means, methods and manner of performing all obligations required under this
agreement. Except as provided herein, neither party will have any right or
authority and will not attempt to enter into any contract, commitment or
agreement, or incur any debt or liability of any nature, in the name or on
behalf of the other party.
21. This writing embodies the entire agreement between the parties
regarding the services of Tufton and Ripken, thereby superseding all other
agreements, whether written or verbal, which may, exist between the parties.
This letter will not be considered an agreement or contract nor will it
create any obligation on the part of Famous Fixins or Tufton, until it has
been signed by the parties below.
Please indicate your agreement with the above terms by signing both
Agreements in the space below and returning both executed copies to my
attention. Upon receipt, I will sign and return an original executed copy to
you for your file. Cal and I look forward to working with you.
Kindest Regards.
Sincerely,
Ira S. Rainess
General Counsel
Famous Fixins, Inc. The Tufton Group
By: /s/ Jason Bauer By: /s/ Ira S. Raainess
----------------------- -------------------------
Jason Bauer Ira S. Rainess
President Chief Operating Officer
EXHIBIT 10.7
[Letterhead of Major League Baseball Properties, Inc.]
April 2, 1999
Mr. Jason B. Bauer
President & CEO
Famous Fixins, Inc.
250 West 57th Street
Suite 2501
New York, NY 10107
Contract #3858
Dear Jason:
Major League Baseball Properties, Inc. ("MLBP") and Famous Fixins, Inc.
("Licensee") agree to enter into a non-exclusive national retail product
license for the food product defined below upon the terms contained in this
letter and the terms and conditions contained in MLBP's standard form
licensing agreement, subject to approval by the 30 Clubs and MLBP's execution
of its form of licensing agreement ("the "License Agreement").
License Period: April 1, 1999 - December 31, 1999
Sell-Off Period: 60 Days
Licensed Territory Maryland, Washington D.C., Virginia,
Philadelphia, North Carolina, South Carolina
and Florida
Compensation: Total Guaranteed Compensation:
$25,000 due by 12/31/99
Percentage Compensation: 1% of Net Sales or $.0258 per box, whichever is
greater for the products identified below
("Products"). The terms "net sales" shall mean
gross sales based on the wholesale price to the
retail trade less quantity discounts and actual
returns but no deduction shall be made for
uncollectible accounts, commissions, taxes,
discounts other than quantity discounts, such
as cash discounts and discounts attributable to
the issuance of a letter of credit, or any
other amount.
Reporting Period: Monthly, first reporting period begins 4/30/99.
Logos: Baltimore Orioles and Major League Baseball
Properties.
Licensed Products: Cal's "Classic O's" Cereal in 14 oz. box
Product Credit: Licensee shall provide to MLBP two (2) cases of
cereal.
Insurance: $5 million product liability insurance.
Licensee must provide a current proof of
Certificate of Insurance upon execution of this
signed agreement.
Indemnity: Licensee shall indemnify MLBP and its
affiliates in connection with claims arising
out of (i) any infringement of any proprietary
and publicity rights not expressly granted
under the License Agreement, (ii) alleged
defects in the Product(s), (iii) false
advertising, fraud, misrepresentation or other
claims related to the Product(s) not
involving a claim of right to the logos, (iv),
the unauthorized use of the logos or any breach
by Licensee of the License Agreement, (v)
invasion of the right of privacy, publicity or
property of any third party, and/or (vi)
agreements or alleged agreements made or
entered into by Licensee to effectuate the
terms of the License Agreement.
MLBP shall indemnify Licensee in connection with
(i) challenges to MLBP's authority to license
the logos in connection with the Product(s), or
(ii) assertions to any claim of right in or
to the logos as authorized on the Products,
provided in each case that licensee shall
give prompt written notice, cooperation and
assistance to MLBP relative to any such
claim or suit, and provided further in
each case that MLBP shall have the option
to undertake and conduct the defense of any
suit so brought (and select counsel therefor)
and to engage in settlement thereof at its
sole discretion.
Quality Control: Except as otherwise directed by MLBP, Licensee
shall comply with the following guidelines
regarding the Licensed Products:
a) The Club's name and/or logo must be featured
in a prominent manner on the front of the
product.
b) The relevant MLB logo must be on the front
or back of each product. The relevant MLB logo
and the following acknowledgement must be
included on all packaging and display
materials: Major League Baseball trademarks
and copyright are used with permission of
Major League Baseball Properties, Inc.
c) Licensee agrees to take, at MLBP's direction,
all necessary steps to render the
counterfeiting of licensed products more
difficult.
Licensee agrees to submit to MLBP for its written
approval samples of each Product before its
manufacture, sale, promotion, advertisement or
distribution, whichever first occurs. Licensee
shall also submit for approval all advertising,
point-of-scale displays, catalogs, sales sheets
and other items that picture MLB logos, prior to
production. In the event that any item submitted
to MLBP for approval or consent shall not have
been approved or consented to, disapproved or
denied, or commented upon within twenty (20) MLBP
business days after receipt thereof by MLBP, and
MLBP shall have received notice from Licensee
that comment is overdue, and MLBP shall not have
commented within five (5) additional MLBP business
days of receipt of such notice, any items or
matters so submitted shall be deemed approved and
consented to. In any instance where any matter is
required to be submitted to MLBP for MLBP's
approval that approval shall be granted or
withheld in MLBP's sole discretion.
Choice of Law
and Jurisdiction: The validity, construction, and enforceability of
this letter and the License Agreement shall be
governed by the internal laws of the State of New
York, without giving effect to conflict of laws
principles thereof. The United States District
Court for the Southern District of New York and
the Supreme Court of the State of New York,
sitting in New York County, shall be the sole
venues for any dispute arising directly or
indirectly from the relationship created or the
transactions contemplated by this letter and the
License Agreement.
Miscellaneous: Rights to player likenesses are not covered under
the License Agreement and must be secured
separately.
Additional specific terms and conditions will be included in the
contract to follow, following confirmation of the general terms of this
proposed agreement by your office. Please sign below and return to me via
fax and hard copy to indicate your concurrence with the foregoing.
Please respond via fax and hard copy by no later than Wednesday, April
14, 1999. We look forward to working with you in the future. In the interim
please feel free to contact me at (212) 931 - 7433 with any questions you may
have.
Sincerely,
/s/ Maureen Cunningham
Maureen Cunningham
Licensing Supervisor
Famous Fixins, Inc.
By: /s/ Jason Bauer
--------------------
Title: President
--------------------
Date: 4/8/99
--------------------
cc: Colin Hagen
Ethan G. Orlinsky, Esq.
Howard Smith
EXHIBIT 10.8
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREENMNT
THHS AGREENENT ("Agreement") is made as of the 12th day of April 1999,
by and between Famous Fixins, Inc. ("Licensee"), a corporation organized
under the laws of the State of New York, having its principal place of
business at 250 West 57th street, Suite 2501, New York, NY 10107, IMS and
KKSM F/S/0 Sammy Sosa ("Licensor"), an individual of full age and majority.
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the name and likeness of Licensor
on and in connection with the development, manufacture, distribution,
promotion, and sale of a line of limited edition cereal products (to include
no more than 2 editions) endorsed by Licensor ("the Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows;
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, photograph, characterization, likeness, voice, image, and
biographical data of Licensor, and the trademarks, logos, copyrights and all
other authorized material owned or controlled by the Licensor (the "Licensed
Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Products, more specifically, cereal
and related merchandise ("the License"). This License shall be effective in
North America and the Caribbean beginning on April 12, 1999 and continuing
for the term of one year until April 14, 2000, (the "License Term"), unless
terminated in accordance with the terms and conditions of Paragraphs 8 or 9
of this Agreement. If sales of the Products reach 1,000,000 boxes, the
License Term shall be automatically extended, and shall end on April 14,
2001.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Products,
more specifically, cereal and related merchandise, provided however, that
Licensee shall have the right to determine: (a) the type and quantity of
Products developed and manufactured; (b) the markets in which the Products
are distributed and sold; (c) the manner of distribution and sale of the
Products; and (d) the volume and nature of advertising for the Products.
Licensee shall submit for Licensor's approval the type of cereal, the name of
cereal, the packaging design, advertising material, press materials and all
other materials to be used in connection with the Products approval of which
shall not be unreasonably delayed or withheld. Licensee shall pay all costs
and expenses in connection with the development, promotion, manufacturing,
packaging, shipping, distribution, sales and promotion of the Products.
Initial distribution markets to include New York, Chicago, Florida,
California, and the Dominican Republic, with National distribution following.
Licensee shall handle all fulfillment (including all check, money order and
credit card transactions) and tracking responsibilities from the sale of
other related merchandise from the back panel or elsewhere on the packaging
or promotional materials of the Products. All rights, titles, and interests
in and to the Products, their formulae and secret ingredients, and their
packaging and labeling shall be, and they are specifically and entirely,
reserved to Licensee and may be fully exploited without regard to the extent
to which such rights may be competitive with this Agreement or the rights
granted hereunder.
3. Licensor's Obligation. Licensor shall supply the Licensed
Subject Matter and press conference appearance, which will last no longer
than one hour. Press conference will be held in the city of Chicago on a
mutually agreeable date and location. Any additional participation is at the
sole discretion of Licensor. If the Licensee requests further participation
by Licensor, Licensee shall provide first class airline tickets,
accommodations and travel for Sammy Sosa and a guest for any appearances
outside a fifty (50) mile radius from Chicago, as well as additional
reasonable compensation to be determined based on the additional requested
appearances). Licensor shall further furnish Licensee with sufficient
information about the Licensor's schedule to allow Licensee to adequately
plan its promotions and sales programs. Any and all publicity regarding
<PAGE>
the Products shall be issued only by Licensee. Licensor shall not be shown
in uniform without the express written consent of MLB. Licensor shall
source, purchase, design and print all related merchandise for back panel and
other promotional materials to be supplied to fulfillment house.
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensor's approval the type of cereal, the name of cereal, the packaging
design, advertising material, press materials and all other materials to be
used in connection with the Products approval of which shall not be
unreasonably delayed or withheld.
5. Compensation. As full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensor completely performs his obligations hereunder,
Licensee shall pay Licensor a license fee via cashier's check or wire
transfer (the "Licensing Fee") in an amount equal to ***** percent (*****%)
of all monies received by Licensee as revenue derived from the sale of the
Products ("Gross Receipts" less slotting fees). Licensor will also receive
***** percent (*****%) of related merchandise gross sales (not including
shipping & handling fees) less *****% of Gross Profits (Gross sales less cost
of goods sold) from the sale of all related merchandise from the back panel
and other promotional materials. In addition, as further consideration for
this Agreement, Licensor will receive a warrant to purchase ***** shares of
the Company's unregistered common stock at the purchase price of $***** per
share (the "exercise price") with an expiration date of five (5) years from
the date hereof upon the signing of this Agreement.
6. Accounting. Licensee shall render a detailed accounting to
Licensor on a quarterly basis on February 1st, April 1st, July 1st, November
1st. Each accounting shall show both quarterly and cumulative Gross Receipts
for the Products and related merchandise and shall be accompanied by the
payment in full then due to the Licensor. Licensee agrees that it will keep
accurate and complete records and books of account showing all endorsed
products and merchandise shipped by it and prices thereof related to
Licensor. Licensor, or Licensor's representative shall have the right at
reasonable times and on reasonable notice to inspect and make copies of the
Licensee books and records of company, at Licensor's expense, in so far as
they relate to the computation of royalties to be paid to Licensor thereunder
and the shipment of endorsed products and related merchandise pursuant to
this Agreement.
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee bearing Licensor's
name and likeness. Licensee will supply evidence of product liability
insurance on a timely basis (i.e. Certificate of Insurance).
8. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy or (c) Licensee permanently discontinues
production and distribution of the Products.
9. License Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; (b) Licensor becomes insolvent
or files a petition in bankruptcy; (c) Licensee determines, in its sole and
absolute discretion, to discontinue production and distribution of the
Products; (d) Licensor becomes the subject of public dispute or scandal that
affects Licensor's image. Injury(ies) or illness of said Licensor shall not
in any way affect the validity of this Agreement.
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgements, penalties,
liabilities, damages, costs and expenses, including, without limitation,
reasonable attorney's fees
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought, or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made pursuant
to this Agreement or through the gross negligence or intentional acts of its
officers, directors, employees, or representatives.
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
substantial portion of Licensee's stock or assets.
12. Notices. Any notice to be hereunder shall be made in writing
and shall be sent by certified U.S. mail, return receipt requested, postage
paid. All notices to Licensor shall be sent to Sammy Sosa, c/o Mark Leonard,
c/o Integrated Marketing Solutions, Inc., 212 West Superior Street, Suite
500, Chicago, IL 60610, All notices to Licensee shall be sent to Jason Bauer,
c/o Famous Fixins, 250 West 57th St., Suite 2501, New York, NY 10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be
construed and enforced in the County of New York in accordance with the laws
of the State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith in
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this Agreement
shall be held void, voidable, invalid, or inoperative, no other provision of
this Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture, distribute, promote, or sell the Products, then Licensee may,
upon notice to Licensor, terminate this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in New
York, New York, on the day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
------------------------
Jason Bauer, President
LICENSOR: /s/ Sammy Sosa
---------------------------
Sammy Sosa
3
EXHIBIT 10.9
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 28 day of April 1999, by
and between Famous Fixins, Inc. ("Licensee"), a corporation organized under
the laws of the State of New York, having its principal place of business at
250 West 57th street, Suite 2501, New York, NY 10107, and Alex Rodriguez
("Licensor"), an individual of full age and majority.
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the name and likeness of Alex
Rodriguez on and in connection with the development, manufacture,
distribution, promotion, and sale of a line of limited edition cereal
products endorsed by Licensor ("the Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, photograph, characterization, likeness, voice, image, and
biographical data of Alex Rodriguez, and the trademarks, logos, copyrights
and all other authorized material owned or controlled by the Licensor (the
"Licensed Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Products, more specifically, cereal
and related merchandise ("the License"). This License shall be effective
Worldwide beginning on the date first written above and continuing until
December 31, 1999, (the "License Term"), unless terminated in accordance with
the terms and conditions of Paragraphs 8 or 9 of this Agreement. If sales of
the Products reach 1,000,000 boxes, the License Term shall be automatically
extended, and shall end on December 31, 2000.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Products,
more specifically, cereal and related merchandise, provided however, that
Licensee shall have the right to determine: (a) the type and quantity of
Products developed and manufactured; (b) the markets in which the Products
are distributed and sold; (c) the manner of distribution and sale of the
Products; and (d) the volume and nature of advertising for the Products.
Licensee shall submit for Licensor's approval the type of cereal, the name of
cereal, the packaging design, advertising material, and all other materials
to be used in connection with the Products subject to the sole and absolute
approval of Licensor which shall not be unreasonably delayed or withheld.
Licensee shall pay all costs and expenses in connection with the development,
promotion, manufacturing, packaging, shipping, distribution, sales and
promotion of the Products. Licensee shall handle all fulfillment (including
all check, money order and credit card transactions) and tracking
responsibilities from the sale of other related merchandise from the back
panel or elsewhere on the packaging or promotional materials of the Products.
All rights, titles, and interests in and to the Products, their formulae and
secret ingredients, and their packaging and labeling shall be, and they are
specifically and entirely, reserved to Licensee and may be fully exploited
without regard to the extent to which such rights may be competitive with
this Agreement or the rights granted hereunder.
3. Licensor's Obligation. Licensor shall provide Alex Rodriguez who
shall supply the Licensed Subject Matter for a one-hour photo shoot and a
press conference appearance (the photoshoot and press conference to be
scheduled at a time when Alex Rodriguez is available given his baseball and
family schedule), which will last no longer than one hour. Any additional
participation is at the sole discretion of Licensor. Licensor shall further
furnish Licensee with sufficient information about Alex Rodriguez' schedule
to allow Licensee to adequately plan its promotions and sales programs. Any
and all publicity regarding the Products shall be issued only by Licensee.
Licensor shall not be shown in uniform without the express written consent of
MLB.
1
<PAGE>
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensor's sole and absolute approval the type of cereal, the name of cereal,
the packaging design, advertising material, and all other materials to be
used in connection with the Products subject to the sole and absolute
approval of Licensor which shall not be unreasonably delayed or withheld.
5. Compensation. As full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensor completely performs his obligations hereunder,
Licensee shall pay Licensor a license fee via cashier's check or wire
transfer (the "Licensing Fee") in an amount equal to *****percent (*****%)
of all monies received by Licensee as revenue derived from the sale of the
Products ("Gross Receipts" less up to a one-time $50,000 slotting fee).
Licensor will also receive ***** percent (*****%) of net proceeds
(net of expenses actually paid at arm's length to independent third parties)
from the sale of all related merchandise (subject to Licensor's sole and
absolute approval) from the back panel and other promotional materials. In
addition, as further consideration for this Agreement, Licensor will receive
a warrant to purchase ***** shares of the Licensor's unregistered common
stock at the purchase price of $***** per share (the "exercise price") with an
expiration date of five (5) years from the date hereof upon the signing of
this Agreement. If License Term is automatically extended as defined in
paragraph 1, Licensor will be entitled to an additional ***** warrants
using the same terms as defined above. All compensation under this Agreement
shall be paid to Licensor on a quarterly basis.
6. Accounting. Licensee shall render a detailed accounting to
Licensor 28 days after the payment of each invoice is received. Each
accounting shall show both period and cumulative Gross Receipts for the
Products and shall be accompanied by the payment in full then due to the
Licensor. Licensor, or Licensor's representative shall have the right at
reasonable times and on reasonable notice to inspect and make copies of the
Licensee books and records of Licensee, at Licensor's expense, in so far as
they relate to the computation of royalties to be paid to Licensor thereunder
and the shipment of endorsed products and related merchandise pursuant to
this Agreement. If the audit or inspection reveals underpayment of 5% or
more, Licensee shall reimburse Licensor for the reasonable costs of the audit
or inspection.
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee hearing Alex
Rodriguez' name and likeness. Licensee will supply evidence of product
liability insurance on a timely basis (i.e. Certificate of Insurance) and
shall name Licensor and Alex Rodriguez as additional insured's.
8. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy; (c) Licensee permanently discontinues
production and distribution of the Products; or (d) Licensee breaches a
material term of this Agreement two or more times in the License Term,
regardless of cure.
9. License Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; (b) Licensor becomes insolvent
or files a petition in bankruptcy; (c) Licensee determines, in its sole and
absolute discretion, to discontinue production and distribution of the
Products; (d) Alex Rodriguez becomes the subject of public dispute or scandal
that materially and adversely affects Alex Rodriguez' image. Injury(ies) or
illness of said Licensor shall not in any way affect the validity
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
of this Agreement. If this Agreement shall be terminated for any reason or
expire as herein provided, Licensee nevertheless may continue to exercise its
rights under this Agreement for 60 days from the date of termination or
expiration for the sole purpose of disposing of its inventory of Products on
hand and in the process of manufacture, including Products returned to
Licensee's inventory after termination or expiration. Licensor shall be duly
compensated in accordance with the terms of this Agreement for any and all
such sales of inventory after the termination or expiration.
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgements, penalties, liabilities, damages,
costs and expenses, including, without limitation, reasonable attorney's fees
and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought, or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made
pursuant to this Agreement, or through the negligence or intentional wrongful
acts of its officers, directors, employees, or representatives.
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
majority of Licensee's stock or assets.
12. Notices. Any notice to be given hereunder shall be made in
writing and shall be sent by certified U.S. mail, return receipt requested,
postage paid. All notices to Licensor shall be sent to Rick Licht, 1436
Butler Ave, #13, Los Angeles, CA 90025. All notices to Licensee shall be
sent to Jason Bauer, c/o Famous Fixins, 250 West 57th St., Suite 2501, New
York, NY 10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be construed
and enforced in the County of New York in accordance with the laws of the
State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith in
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this Agreement shall
be held void, voidable, invalid, or inoperative, no other provision of this
Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture, distribute, promote, or sell the Products, then Licensee may,
upon notice to Licensor, terminate this Agreement.
16. Trademark. Licensee covenants not to infringe on anyone's
intellectual property rights in the production or sale of the Products.
3
<PAGE>
17. Confidentiality. Each party to this Agreement covenants and
agrees that, both during the License Term and at all times thereafter, it
will not: (a) use or disclose to any person or entity any Confidential
Information of the other party, (b) in any other way publicly or privately
disseminate any Confidential Information, and (c) help anyone else to do any
of these things, unless required to do so by law. "Confidential Information"
means any and all information disclosed by one party to the other that is not
generally known to the public. Except with the prior written consent of each
and every party to this Agreement in each instance, a party will not
disclose, reveal, make public, or make generally known the financial aspects
of this Agreement. As exceptions to the foregoing, the parties may reveal
such financial information to their respective agents, business manager,
family members, accountants, and attorneys; provided, however, the parties
shall impose a written requirement of strict confidentiality upon their
agents, accountants, and attorneys for the benefit of each of the parties.
In addition, the parties shall be entitled to reveal this Agreement to the
U.S. Internal Revenue Service, to the state or local Departments of Revenue
where parties file their tax returns, and as required by law or by order of a
court of competent jurisdiction.
18. Arbitration. All questions and disputes with respect to the
rights and obligations of the parties arising under the terms of this
Agreement shall be resolved by arbitration. Either party shall have the
right to submit the propriety of a dispute to binding confidential
arbitration. Each party shall bear its own expenses incurred in connection
with any such arbitration and one-half of the arbitration fees; provided,
however, the arbitrator is hereby authorized to award reasonable attorneys'
fees and costs to the prevailing party. The venue of the arbitration shall
be New York, New York, and the arbitrator shall apply the substantive law of
the State of New York. Any and all hearings shall be conducted in New York,
New York. The parties agree to use their best efforts to schedule any such
hearings outside of the Major League Baseball season.
The party desiring arbitration shall serve notice upon the other party,
together with designation of the first party's representative. If the person
designated by the first party is acceptable to the second party as an
arbitrator, the second party shall so notify the first party within ten days
and such representative shall serve as the sole arbitrator. If the person so
designated is not acceptable to the second party, then the second party shall
designate his/her or its own representative in a notice to the first party
within the same ten-day period. The two representatives so named, if such is
the case, shall within ten days thereafter appoint an arbitrator, and the
arbitrator shall then proceed forthwith to hear and unilaterally determine
the matter. If either party fails, within the time allowed herein, to
appoint its representative, the representative named by the other party shall
act as the sole arbitrator and unilaterally decide the matter. If the two
representatives are unable to agree upon an arbitrator within the ten days
allowed herein, either party may at any time apply to the presiding judge of
any court of competent jurisdiction for the appointment of an arbitrator, and
the arbitrator shall proceed forthwith to hear and unilaterally determine the
matter. In all events the arbitrator shall be a licensed attorney at law in
the State of New York with a minimum of ten years' experience in handling
matters of the kind which are represented by this Agreement. The arbitrator
shall be entitled to reasonable compensation at his or her usual professional
rates. Except as otherwise provided herein, the arbitration shall be
conducted in accordance with the rules of the American Arbitration
Association, but without regard to any portions thereof which require
administration by such association.
The powers of the arbitrator shall be limited as set forth herein. The
arbitrator shall make an award in writing that is consistent with the terms
of this Agreement, and that includes a reasoned decision. In no event shall
the demand for arbitration be made after the date when institution of legal
or equitable proceedings based on such claim, dispute, or other matter(s) in
question would be barred by the applicable statute of limitations, and the
arbitrator shall reject any claim that is not based upon a timely filed
demand.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement in New
York, New York, on the day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------------
Jason Bauer, President
LICENSOR: ALEX RODRIGUEZ
By: /s/ Alex Rodriguez
----------------------------
Alex Rodriguez
5
EXHIBIT 10.10
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 29th day of April 1999,
by and between Famous Fixins, Inc. ("Licensee"), a corporation organized
under the laws of the State of New York, having its principal place of
business at 250 West 57th Street, Suite 2501, New York, New York 10107, and
Ken Caminiti, Craig Biggio, and Jeff Bagwell (individually a "Licensor" and
collectively "Licensors"), each an individual of full age and majority.
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the names and likenesses of
Licensors on and in connection with the development, manufacture,
distribution, promotion, and sale of a line of limited edition cereal
products endorsed by Licensors (the "Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License.
(a) Licensors hereby grant Licensee the right to use the name,
photograph, characterization, likeness, voice, image, and biographical data
of Licensors, and the trademarks, logos, copyrights and all other authorized
material owned or controlled by the Licensors (the "Licensed Subject Matter")
in connection with the development, manufacture, distribution, promotion, and
sale of the Products, more specifically, cereal and related merchandise (the
"License"). This License shall be effective worldwide beginning on April 29,
1999 and continuing for the term of one year until April 20, 2000, (the
"License Term"), unless terminated in accordance with the terms and
conditions of Paragraphs 8 or 9 of this Agreement. If sales of the Products
reach a total of 1,000,000 boxes, the License Term shall be automatically
extended, and shall end on April 30, 2001.
(b) For the License Term, Licensors also grant Licensee the
right to develop, design, produce, manufacture, distribute, promote and sell
merchandise related to the Products ("Related Merchandise"). Related
Merchandise is defined as hats and T-shirts bearing the name and logo of the
cereal (with no use of the name, likeness, image, photograph, signature or
characterization of any of the individual Licensors) and to be sold only by
way of direct sales through cereal box redemption programs, mail order,
Internet, or print advertising.
2. Licensee's Obligations.
(a) Licensee shall undertake to use its best efforts to
develop, manufacture, distribute, promote, and sell the Products, more
specifically, cereal, provided however, that Licensee shall have the right to
determine: (a) the type and quantity of Products developed and manufactured;
(b) the markets in which the Products are distributed and sold; (c) the
manner of distribution and sale of the Products; and (d) the volume and
nature of advertising for the
1
<PAGE>
Products. Licensee shall submit for Licensors' approval the type of cereal,
the name of cereal, the packaging design, advertising material, and all other
materials to be used in connection with the Products approval of which shall
not be unreasonably delayed or withheld. Licensee shall pay all costs and
expenses in connection with the development, promotion, manufacturing,
packaging, shipping, distribution, sales and promotion of the Products.
Licensee shall handle all fulfillment (including all check, money order and
credit card transactions) and tracking responsibilities from the sale of
other Related Merchandise from the back panel or elsewhere on the packaging
or promotional materials of the Products. All rights, titles, and interests
in and to the Products, their formulae and secret ingredients, and their
packaging and labeling shall be, and they are specifically and entirely,
reserved to Licensee and may be fully exploited without regard to the extent
to which such rights may be competitive with this Agreement or the rights
granted hereunder.
(b) Licensee agrees that prior to the use, production, or
publication of any materials for the Products or Related Merchandise under
this Agreement, it will submit to each Licensor and/or his representative
(Rick Licht for Mr. Caminiti, and Barry Alexrod for Messrs. Bagwell and
Biggio) a copy of the proposed material for review and for approval.
Approval rights must be exercised by each Licensor within seventy-two (72)
hours of receipt of copy by Licensor or his representative, and failure of a
Licensor to respond within said time period shall be deemed approval of said
copy. Licensee agrees that it will not depict any Licensor in any
embarrassing or derogatory light and that the materials shall not be released
without prior approval of each Licensor or his representative as stated
above. Licensee agrees that complimentary duplicates of all of such
materials featuring Licensors or their endorsement shall be delivered to each
Licensor's representative for non-commercial use. Such materials may
include, but are not limited to, photographs, transparencies, slides, cereal
boxes, posters and video tapes of Licensors.
(c) Licensee shall be responsible for, and use commercially
reasonable efforts in, obtaining the permission and/or rights from Major
League Baseball Properties, Major League Baseball Players Association, and/or
the Houston Astros for the Products and Related Merchandise, if necessary to
prevent infringement by the Products and Related Merchandise of the
license(s) held by these entities. Licensee shall bear the costs and related
expenses in connection with obtaining such permission and/or rights from
these entities.
3. Licensors' Obligation.
(a) Each Licensor shall be obligated to make a total of two
personal appearances (which may be in the form of a photo shoot or press
conference), each of which appearance shall last no longer than one hour for
each Licensor. Any additional participation is at the sole discretion of
each Licensor. Licensors shall further furnish Licensee with sufficient
information about the Licensors' schedule to allow Licensee to adequately
plan its promotions and sales programs. Any and all publicity regarding the
Products shall be issued only by Licensee. Licensors shall not be shown in
uniform without the express written consent of Major League Baseball.
2
<PAGE>
(b) Licensee agrees the personal appearances by Licensors shall
be at or in the vicinity of the Astrodome and on dates and at times
reasonably convenient to Licensors. No appearances shall be scheduled on
off-days. Licensee agrees to provide desired appearance dates as much in
advance as is reasonably possible. Licensee and Licensors shall cooperate in
good faith and use their best respective efforts to select mutually agreeable
dates and times for rendition of Licensors' obligations under this Agreement.
In the event of a schedule conflict, Licensors will advise Licensee of the
earliest possible date on which Licensors can render their obligations
hereunder without conflicting with prior bona fide commitments.
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensors prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensors' approvals the type of cereal, the name of cereal, the packaging
design, advertising material, and all other materials to be used in
connection with the Products, approval of which shall not be unreasonably
delayed or withheld.
5. Compensation. As full and complete compensation to Licensors for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensors completely performs their obligations hereunder,
Licensee shall pay Licensors collectively a license fee via cashier's check
or wire transfer (the "Licensing Fee") in an amount equal to a total of
***** percent (*****%) of all monies received by Licensee as revenue
derived from the sale of the Products ("Gross Receipts" less up to $50,000 in
slotting fees). Licensee shall also pay Licensors collectively a total of
***** percent (*****%) of net sales from the sale of all related
merchandise from the back panel and other promotional materials. In
addition, as further consideration for this Agreement, upon the signing and
delivery of this Agreement, each Licensor will receive a warrant to purchase
***** shares of the Company's unregistered common stock exercisable at the
purchase price of $***** per share (the "exercise price") with an expiration
date of five (5) years from the date hereof. If the Licensed Term is
automatically extended as defined in Paragraph 1, each Licensor will be
entitled to an additional warrant for an additional ***** shares of common
stock exercisable at the fair market value of the common stock at the time of
issuance of said additional warrant, and otherwise using the same terms as
defined above.
6. Accounting. Licensee shall render a detailed accounting to
Licensors on a quarterly basis. Each accounting shall show both period and
cumulative Gross Receipts for the Products and shall be accompanied by the
payment in full then due to the Licensors. Payment for Ken Caminiti shall
be sent to Rick Licht and payment for Craig Biggio and Jeff Bagwell shall be
sent to Barry Axelrod. Licensors, or Licensors' representative, shall have
the right at reasonable times and on reasonable notice to inspect and make
copies of Licensee's books and records in so far as they relate to the
computation of royalties to be paid to Licensors thereunder and the shipment
of endorsed products and Related Merchandise pursuant to this Agreement.
Such examination shall be at Licensors' expense, unless errors amounting to
five percent (5%) or more of the total sums due Licensors hereunder shall be
found and are to Licensors' disadvantage, in which circumstance the
reasonable cost of the examination shall be borne by Licensee.
3
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee bearing Licensors
name and likeness. Licensee agrees to immediately include each Licensor as
an additional named insured on its general liability insurance policy and to
provide Licensors with certificates of insurance evidencing this action.
8. Licensors' Termination. Licensors may terminate this Agreement
upon forty-five (45) days written notice if (a) Licensee breaches a material
term of this Agreement and fails to remedy said breach within thirty (30) days
of its receipt of written notice of the breach; (b) Licensee becomes
insolvent or files a petition in bankruptcy or (c) Licensee permanently
discontinues production and distribution of the Products.
9. Licensee' Termination. Licensee may terminate this agreement
upon forty-five (45) days written notice if (a) any Licensor breaches a
material term of this Agreement and fails to remedy said breach within thirty
(30) days of his receipt of written notice of the breach; (b) any Licensor
becomes insolvent or files a petition in bankruptcy; (c) Licensee determines,
in its sole and absolute discretion, to discontinue production and
distribution of the Products; (d) any Licensor becomes the subject of public
dispute or scandal that affects Licensors image. Injury(ies) or illness of
said Licensors shall not in any way affect the validity of this Agreement.
10. Indemnification.
(a) Licensee agrees to protect, defend, indemnify and hold
harmless Licensors from and against any and all expenses, damages, claims,
suits, actions, judgments and costs whatsoever, including attorneys' fees and
other costs of defense, arising out of, or in any way connected with, any
claim or action for personal injury, wrongful death, product liability, or
any other injury or damage resulting from promotion, advertisement,
endorsement, manufacture, distribution, marketing, sale, or use of any
product available through or from Licensee
(b) Licensors agree to protect, defend, indemnify and hold
harmless Licensee and its respective directors, officers, employees,
licensees, agents, and assigns harmless from and against any and all
expenses, damages, claims, suits, actions, judgments, production costs, or
non-cancelable media expenditures and any other costs and expenses, including
attorneys' fees and other costs of defense, arising out of any breach by
Licensors of any warranty or agreement made by each said Licensor herein or
in the performance of Licensors' obligations hereunder.
(c) Any party hereto seeking indemnification agrees to notify
the party from whom indemnification is sought as soon as possible after a
claim has been made. The party from whom indemnification is sought may then
elect to defend; otherwise, such party will reimburse the other party for its
costs of defense.
11. Assignment. Neither Licensors nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
substantial portion of Licensee's stock or assets.
4
<PAGE>
12. Notices. Any notice to be hereunder shall be made in writing and
shall be sent by certified U.S. mail, return receipt requested, postage paid.
All notices to Licensors shall be sent to:
Rick Licht
1436 Butler Ave, #13
Los Angeles, CA 90025
and to:
Barry Axelrod
2236 Encinitas Blvd., Suite A
Encinitas, CA 92024
All notices to Licensee shall be sent to:
Jason Bauer
Famous Fixins
250 West 57th Street, Suite 2501
New York, NY 10107
with a copy to:
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, NY 10016.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensors, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be
construed and enforced in the County of New York in accordance with the laws
of the State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith in
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this Agreement
shall be held void, voidable, invalid, or inoperative, no other provision of
this
5
<PAGE>
Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture, distribute, promote, or sell the Products, then Licensee may,
upon notice to Licensors, terminate this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in New
York, New York, on the day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
-------------------------------
Jason Bauer, President
LICENSORS: /s/ Ken Caminiti
--------------------------------
Ken Caminiti
/s/ Craig Biggio
--------------------------------
Craig Biggio
/s/ Jeff Bagwell
--------------------------------
Jeff Bagwell
EXHIBIT 10.11
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 7th day of May 1999, by
and between Famous Fixins, Inc. ("Licensee"), a corporation organized under
the laws of the State of New York, having its principal place of business at
250 West 57th street, Suite 2501, New York, NY 10107, and Killer Bee, Inc.
("Licensor"), a California corporation.
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the name and likeness of Mr. Barry
L. Bonds on and in connection with the development, manufacture,
distribution, promotion, and sale of a line of limited edition cereal
products endorsed by Licensor ("the Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, photograph, characterization, likeness, voice, image, and
biographical data of Mr. Barry L. Bonds, and the trademarks, logos, copyrights
and all other authorized material owned or controlled by the Licensor (the
"Licensed Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Products, more specifically, cereal
and related merchandise ("the License"). This License shall be effective
Worldwide beginning on the date first written above and continuing until
December 31, 1999, (the "License Term"), unless terminated in accordance with
the terms and conditions of Paragraphs 8 or 9 of this Agreement. If sales of
the Products reach 1,000,000 boxes, the License Term shall be automatically
extended, and shall end on December 31, 2000.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Products,
more specifically, cereal and related merchandise, provided however, that
Licensee shall have the right to determine: (a) the type and quantity of
Products developed and manufactured; (b) the markets in which the Products
are distributed and sold; (c) the manner of distribution and sale of the
Products; and (d) the volume and nature of advertising for the Products.
Licensee shall submit for Licensor's approval the type of cereal, the name of
cereal, the packaging design, advertising material, and all other materials
to be used in connection with the Products subject to the sole and absolute
approval of Licensor which shall not be unreasonably delayed or withheld.
Licensee shall pay all costs and expenses in connection with the development,
promotion, manufacturing, packaging, shipping, distribution, sales and
promotion of the Products. Licensee shall handle all fulfillment (including
all check, money order and credit card transactions) and tracking
responsibilities from the sale of other related merchandise from the back
panel or elsewhere on the packaging or promotional materials of the Products.
All rights, titles, and interests in and to the Products, their formulae and
secret ingredients, and their packaging and labeling shall be, and they are
specifically and entirely, reserved to Licensee and may be fully exploited
without regard to the extent to which such rights may be competitive with
this Agreement or the rights granted hereunder.
3. Licensor's Obligation. Licensor shall provide Mr. Barry L. Bonds
who shall supply the Licensed Subject Matter for a one-hour photo shoot and a
press conference appearance in San Francisco, California (the photoshoot and
press conference to be scheduled at a time when Mr. Barry L. Bonds is
available given his baseball and family schedule), which will last no longer
than one hour. Any additional participation is at the sole discretion of
Licensor. Licensor shall further furnish Licensee with sufficient information
about Mr. Barry L. Bonds' schedule to allow Licensee to adequately plan its
promotions and sales programs. Any and all publicity regarding the Products
shall be issued only by Licensee. Licensor shall not be shown in uniform
without the express written consent of MLB.
1
<PAGE>
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensor's sole and absolute approval the type of cereal, the name of cereal,
the packaging design, advertising material, and all other materials to be
used in connection with the Products subject to the sole and absolute
approval of Licensor which shall not be unreasonably delayed or withheld.
5. Compensation. As full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensor completely performs his obligations hereunder,
Licensee shall pay Licensor a license fee via cashier's check or wire
transfer (the "Licensing Fee") in an amount equal to ***** percent
(*****%) of all monies received by Licensee as revenue derived from the sale
of the Products ("Gross Receipts" less up to a one-time $50,000 slotting
fee). Licensor will also receive ***** percent (*****%) of net proceeds
(net of expenses actually paid at arm's length to independent third parties)
from the sale of all related merchandise (subject to Licensor's sole and
absolute approval) from the back panel and other promotional materials. In
addition, as further consideration for this Agreement, Licensor will receive
a warrant to purchase ***** shares of the Licensor's unregistered common
stock at the purchase price of $***** per share (the "exercise price") with an
expiration date of five (5) years from the date hereof upon the signing of
this Agreement, and Licensor's foundation shall receive a like warrant
($*****) for ***** shares upon signing of this Agreement. If License Term
is automatically extended as defined in paragraph 1, Licensor will be entitled
to an additional ***** warrants using the same terms as defined above.
All sums which become due to Endorser shall be paid in strict accordance with
wire instructions of Licensor, or if none are given, by check made payable to
Licensor delivered on or before its due date. Any checks made payable to
Licensor shall be mailed to Licensor in care of Bank of America, 600 Hansen
Way, Suite 220, Palo Alto, California 94304, Attn: Manager. All
compensation under this Agreement shall be paid to Licensor on a quarterly
basis.
6. Accounting. Licensee shall render a detailed accounting to
Licensor 28 days after the payment of each invoice is received. Each
accounting shall show both period and cumulative Gross Receipts for the
Products and shall be accompanied by the payment in full then due to the
Licensor. Licensor, or Licensor's representative shall have the right at
reasonable times and on reasonable notice to inspect and make copies of the
Licensee books and records of Licensee, at Licensor's expense, in so far as
they relate to the computation of royalties to be paid to Licensor thereunder
and the shipment of endorsed products and related merchandise pursuant to
this Agreement. If the audit or inspection reveals underpayment of 5% or
more, Licensee shall reimburse Licensor for the reasonable costs of the audit
or inspection.
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee hearing Mr. Barry L.
Bonds' name and likeness. Licensee will supply evidence of product liability
insurance on a timely basis (i.e. Certificate of Insurance) and shall name
Licensor and Mr. Barry L. Bonds as additional insureds.
8. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy; (c) Licensee permanently discontinues
production and distribution of the Products; or (d) Licensee breaches a
material term of this Agreement two or more times in the License Term,
regardless of cure.
9. License Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; (b) Licensor becomes insolvent
or files a petition in bankruptcy; (c) Licensee determines, in its sole and
absolute discretion, to discontinue production and distribution of the
Products; (d) Mr. Barry L. Bonds becomes the subject of public dispute or
scandal that materially and adversely affects Mr. Barry L.
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
Bonds' image. Injury(ies) or illness of said Licensor shall not in any way
affect the validity of this Agreement. If this Agreement shall be terminated
for any reason or expire as herein provided, Licensee nevertheless may
continue to exercise its rights under this Agreement for 60 days from the date
of termination or expiration for the sole purpose of disposing of its
inventory of Products on hand and in the process of manufacture, including
Products returned to Licensee's inventory after termination or expiration.
Licensor shall be duly compensated in accordance with the terms of this
Agreement for any and all such sales of inventory after the termination or
expiration.
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgements, penalties, liabilities, damages,
costs and expenses, including, without limitation, reasonable attorney's fees
and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought, or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made
pursuant to this Agreement, or through the negligence or intentional wrongful
acts of its officers, directors, employees, or representatives.
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring at
least 80% of Licensee's stock or assets.
12. Notices. Any notice to be given hereunder shall be made in
writing and shall be sent by certified U.S. mail, return receipt requested,
postage paid. All notices to Licensor shall be sent to Charles Gardner at
1255 Shelter Creek Lane, San Bruno, CA 94066, with copies to Rick Licht, 1436
Butler Ave, #13, Los Angeles, CA 90025. All notices to Licensee shall be
sent to Jason Bauer, c/o Famous Fixins, 250 West 57th St., Suite 2501, New
York, NY 10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be construed
and enforced in the County of New York in accordance with the laws of the
State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith in
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this Agreement shall
be held void, voidable, invalid, or inoperative, no other provision of this
Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture, distribute, promote, or sell the Products, then Licensee may,
upon notice to Licensor, terminate this Agreement.
16. Trademark. Licensee covenants not to infringe on anyone's
intellectual property rights in the production or sale of the Products.
3
<PAGE>
17. Confidentiality. Each party to this Agreement covenants and
agrees that, both during the License Term and at all times thereafter, it
will not: (a) use or disclose to any person or entity any Confidential
Information of the other party, (b) in any other way publicly or privately
disseminate any Confidential Information, and (c) help anyone else to do any
of these things, unless required to do so by law. "Confidential Information"
means any and all information disclosed by one party to the other that is not
generally known to the public. Except with the prior written consent of each
and every party to this Agreement in each instance, a party will not
disclose, reveal, make public, or make generally known the financial aspects
of this Agreement. As exceptions to the foregoing, the parties may reveal
such financial information to their respective agents, business manager,
family members, accountants, and attorneys; provided, however, the parties
shall impose a written requirement of strict confidentiality upon their
agents, accountants, and attorneys for the benefit of each of the parties.
In addition, the parties shall be entitled to reveal this Agreement to the
U.S. Internal Revenue Service, to the state or local Departments of Revenue
where parties file their tax returns, and as required by law or by order of a
court of competent jurisdiction.
18. Arbitration. All questions and disputes with respect to the
rights and obligations of the parties arising under the terms of this
Agreement shall be resolved by arbitration. Either party shall have the
right to submit the propriety of a dispute to binding confidential
arbitration. Each party shall bear its own expenses incurred in connection
with any such arbitration and one-half of the arbitration fees; provided,
however, the arbitrator is hereby authorized to award reasonable attorneys'
fees and costs to the prevailing party. The venue of the arbitration shall
be New York, New York, and the arbitrator shall apply the substantive law of
the State of New York. Any and all hearings shall be conducted in New York,
New York. The parties agree to use their best efforts to schedule any such
hearings outside of the Major League Baseball season.
The party desiring arbitration shall serve notice upon the other party,
together with designation of the first party's representative. If the person
designated by the first party is acceptable to the second party as an
arbitrator, the second party shall so notify the first party within ten days
and such representative shall serve as the sole arbitrator. If the person so
designated is not acceptable to the second party, then the second party shall
designate his/her or its own representative in a notice to the first party
within the same ten-day period. The two representatives so named, if such is
the case, shall within ten days thereafter appoint an arbitrator, and the
arbitrator shall then proceed forthwith to hear and unilaterally determine
the matter. If either party fails, within the time allowed herein, to
appoint its representative, the representative named by the other party shall
act as the sole arbitrator and unilaterally decide the matter. If the two
representatives are unable to agree upon an arbitrator within the ten days
allowed herein, either party may at any time apply to the presiding judge of
any court of competent jurisdiction for the appointment of an arbitrator, and
the arbitrator shall proceed forthwith to hear and unilaterally determine the
matter. In all events the arbitrator shall be a licensed attorney at law in
the State of New York with a minimum of ten years' experience in handling
matters of the kind which are represented by this Agreement. The arbitrator
shall be entitled to reasonable compensation at his or her usual professional
rates. Except as otherwise provided herein, the arbitration shall be
conducted in accordance with the rules of the American Arbitration
Association, but without regard to any portions thereof which require
administration by such association.
The powers of the arbitrator shall be limited as set forth herein. The
arbitrator shall make an award in writing that is consistent with the terms
of this Agreement, and that includes a reasoned decision. In no event shall
the demand for arbitration be made after the date when institution of legal
or equitable proceedings based on such claim, dispute, or other matter(s) in
question would be barred by the applicable statute of limitations, and the
arbitrator shall reject any claim that is not based upon a timely filed
demand.
19. Charity. "50% of the net proceeds to Mr. Bonds will be donated to
Bay Area charities including the Link N' Learn Program conducted in the San
Francisco Bay Area by The Bonds Family Foundation. Link N' Learn will
establish on-site learning centers at 8 public schools and 5 community centers
in four Bay Area communities. These sites will use intensive personalized
4
<PAGE>
tutoring techniques and interactive instructional technology to increase
parental involvement and to achieve measurable grade-level academic
improvement among children in the K-4th grades in the four Bay Area
communities." Licensee agrees to put the foregoing statement on the cereal
box and all advertising, promotional and public relations information issued
in connection with the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in New
York, New York, on the day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------------
Jason Bauer, President
LICENSOR: KILLER BEE, INC.
By: /s/ Barry Bonds
----------------------------
Barry Bonds, President
5
EXHIBIT 10.12
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
ENDORSEMENT AGREEMENT
THIS ENDORSEMENT AGREEMENT (this "Agreement"), made and entered into as
of May 31, 1999, by and between FAMOUS FIXINS, INC., 250 West 57th Street,
Suite 2501, New York, New York 10107 ("Company") and TURN 2, INC. ("Turn
2").
WITNESSETH
WHEREAS, Company desires to obtain the right to use the name, likeness
and endorsement of Derek Jeter (hereinafter called "Jeter") in connection
with the advertisement, promotion and sale of Company's "Products"
(hereinafter defined); and
WHEREAS, Jeter has granted such rights to Turn 2 together with the
right to sublicense such rights.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and conditions herein contained, the parties do hereby agree
as follows:
1. Definitions. As used herein, the following terms shall be
defined as set forth below:
(a) "Contract Period" shall mean that period of time commencing as of
May 31, 1999 and concluding May 31, 2000.
(b) "Contract Territory" shall mean the United States of America and
Company's e-commerce site.
(c) "Contract Year Quarter" shall mean each 3 consecutive month
period occurring during any Contract Year ("Contract Year" meaning any twelve
month period herein commencing as of June 1) (so that, by way of example, the
first Contract Year Quarter of the first Contract Year commences as of June
1, 1999, the second commences on September 1, 1999, etc.).
(d) "Endorsed Products" shall mean all Products of Company which have
the Jeter Identification (defined below) highlighted as a part thereof (in
the Products' name or otherwise) or which are shipped in containers or
packages bearing the Jeter Identification.
<PAGE>
(e) "Jeter Identification" shall mean any words or symbols or
photographic or graphic representations or combinations thereof which
identify Jeter such as, for example, the name and likeness of Jeter.
(f) "Premium Program" shall mean any traffic builder, third party
tie-in program or other program involving the use of a premium and shall
include any program primarily designed to attract the consumer to purchase a
product or service other than Endorsed Products themselves.
(g) "Products" shall mean cold breakfast cereals.
2. Grant of Endorsement Rights. (a) Turn 2 grants to Company the
exclusive right and license to use Jeter Identification within the Contract
Territory during the Contract Period in connection with the advertisement and
promotion by Company of Products in television, radio, print and point of
purchase. Turn 2 also grants to Company, subject to all of the terms and
conditions herein, the non-exclusive right to use the Jeter Identification in
connection with certain merchandise that may be featured on the back panel of
the Endorsed Products packaging, said merchandise to be subject to Turn 2's
sole and exclusive discretion and approval. Notwithstanding anything herein
to the contrary, it is specifically agreed that the Jeter Identification
cannot be used, in whole or in part, in connection with (i) Premium Programs
and/or (ii) any multi-media use except for Company's e-commerce site. Turn 2
expressly agrees that the right to use Jeter Identification will not be
granted to anyone other than Company for use within the Contract Territory
during the Contract Period in connection with the advertisement, promotion
and sale of Products. Anything herein to the contrary notwithstanding,
Company shall not have the right to distribute photographs of Jeter which are
larger than 5" x 7".
(b) Company agrees that during the Contract Period it will use its
best efforts actively and aggressively to (i) promote the sale of all
Endorsed Products in the Contract Territory, and (ii) prevent the sale of any
Endorsed Products outside the Contract Territory. Failure of Company to
comply with the provisions of this Section 2(b) shall entitle Turn 2 to
revoke this license immediately (notwithstanding any other provision in this
Agreement to the contrary).
(c) Turn 2 has the right to terminate this Agreement immediately if
Company's Endorsed Products are not being distributed nationally to a
significant number of stores by September 1, 1999.
3. Approvals. Company agrees that no use whatsoever of Jeter
Identification nor any item used in connection with Jeter Identification
(including, without limitation, advertising) will be made hereunder unless
and until the same has been approved by Turn 2. Turn 2 agrees that any
material, advertising or otherwise, submitted for approval as provided herein
may be deemed by Company to have been approved hereunder if the same is not
disapproved in writing within fourteen (14) days after receipt thereof.
Turn 2 agrees that any material submitted
-2-
<PAGE>
hereunder will not be unreasonably disapproved and, if it is disapproved,
that Company will be advised of the specific grounds therefor. Company
agrees to protect, indemnify and save harmless Turn 2 and Jeter, or either
of them, from and against any and all expenses, damages, claims, suits,
actions, judgments and costs whatsoever, arising out of, or in any way
connected with, any advertising material furnished by, or on behalf of,
Company.
4. Remuneration. (a) Within thirty (30) days following the
conclusion of each Contract Year Quarter, Company shall deliver to Turn 2 an
itemized statement setting forth the total shipments of Endorsed Products
during said Contract Year Quarter and, at the same time, shall pay to Turn 2
a royalty with respect to such shipments as hereinafter provided. Such
royalties shall be based upon the actual invoice price of such shipments,
exclusive only of shipping charges and sales taxes, and shall be at the rate
of *****% of the total of said invoice prices with a minimum invoice price
of $2.50 per box.
(b) In addition to the royalty payments set forth above, Company
agrees to grant Turn 2 an option to purchase an aggregate of ***** shares of
Company's publicly traded and registered stock (the "Shares") at an exercise
price of $***** per share (the "Option"), which Option shall vest and become
unrestricted when the SEC declares Company's registration statement effective
(anticipated to be no later than November 30, 1999) and shall be exercisable
until June 30, 2004. As further inducement to Turn 2 to enter into this
Agreement, Company and Turn 2 will enter into that certain Option Agreement
dated as of the date of this Agreement, which shall govern all aspects of the
Option.
(c) Further, Turn 2 will be entitled to ***** percent (*****%)
of all gross profits (i.e., gross revenues less only Company's actual out-of-
pocket costs of obtaining the raw merchandise) generated from merchandise
related to the Endorsed Products and/or the Jeter Identification, said
merchandise to be advertised exclusively on the back panel of each box of
Endorsed Products. Except for the advertising of merchandise related to the
Endorsed Products and/or the Jeter Identification, no other use of the back
panel of each box of Endorsed Products is permitted without Turn 2's prior
written consent. It is agreed that all such merchandise must be mutually
approved in all respects by the parties hereto, including, without
limitation, the style, design and cost thereof.
(d) In addition to and separate from any other remuneration
hereunder, if Company uses any performance or service of Jeter hereunder in
any way that is subject to the jurisdiction of any applicable artists' union,
guild or other organization (including, without limitation, SAG and AFTRA),
either during or after the Contract Period, Company shall pay directly to
such organization all minimum payments or fees (for benefit plans or
otherwise) required to be made with respect to Jeter's performance or
services.
(e) If, at any time during the Contract Period, Company shall enter
into any agreement (the terms of what are significantly the same as the terms
hereof) in connection with
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***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
the production and sale of Company's products using the name, likeness,
photographic representation or signature of any other Major League Baseball
player (active or retired)(except Sammy Sosa or Mark McGwire), which
agreement provides for the payment to such individual of remuneration in
excess of that set forth herein, then Company agrees it will immediately so
notify Turn 2 and, at the same time, shall, retroactive to the effective date
of such other agreement, increase the rate of remuneration paid to Turn 2
hereunder up to the highest then current rate paid by Company to any such
Major League Baseball player (active or retired)(except Sammy Sosa or Mark
McGwire).
5. Notices and Submissions. Turn 2 hereby designates International
Merchandising Corporation, IMG Center, Suite 100, 1360 East 9th Street,
Cleveland, Ohio 44114, Attn.: Casey Close, as Turn 2's authorized agent for
all purposes hereunder. All notices, submissions and/or requests for
approval to be made, obtained or delivered by Company to Turn 2 pursuant to
this Agreement shall be delivered to said address free of all charges such
as, for example, shipping charges and customs charges. In the event that any
such charges are paid by Turn 2 or by Turn 2's authorized agent, Company
agrees to make prompt reimbursement.
6. Payments; Books and Records. (a) Turn 2 may elect to have
payments made by check, wire transfer or bank transfer. Unless such election
has been made in writing, all payments shall be made by check drawn to the
order of "Turn 2, Inc." and delivered to IMG, Suite 100, 1360 East 9th
Street, Cleveland, Ohio 44114, Attn.: Casey Close. Payments shall be made
together with such Value Added Tax or equivalent as may be chargeable thereon.
Past due payments hereunder shall bear interest at the rate of (i)
one and one-half percent (1-1/2%) per month, or (ii) the maximum interest
rate permissible under law, whichever is less.
(b) Company agrees that it will keep accurate and complete records
and books of account showing all Endorsed Products shipped by it and the
price thereof. Turn 2, or its representatives, shall, upon two weeks'
written notice, have the right at all reasonable times (prior to the
expiration of two (2) years after the termination of the Contract Period) to
inspect and make copies of the books and records of Company insofar as they
shall relate to the computation of royalties to be paid to Turn 2 hereunder
and the shipment of Endorsed Products pursuant to this Agreement. In the
event that any such inspections show an underreporting and underpayment in
excess of five percent (5%) for any twelve (12) month period, then Company
shall pay the cost of such examination.
7. Labels/Packaging. (a) It is understood that each of the Endorsed
Products shipped by Company or its container or the packaging therefor shall
have affixed thereto a label or other permanent identification which includes
Jeter Identification.
(b) It is hereby agreed that the back panel of the Endorsed Products'
packaging will feature ad copy or offers as determined by Turn 2 and its
agent, subject to Company's right to reasonably reject such materials only if
such materials are clearly offensive to a majority of the
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<PAGE>
populace. Any and all revenues generated by such ad copy or offers shall be
disbursed in accordance with Section 4(c) above. Further, the side panel of
the Endorsed Products packaging shall feature a charity or other entity of
Jeter's sole choice. All packaging costs shall be Company's sole
responsibility.
8. Trademarks. Should Company, at any time or times during the
Contract Period, desire to register a trademark or trademarks which include
Jeter Identification, or which relate in any manner to Jeter, and/or to
register Company as a user thereof, Turn 2 shall execute any and all
documents which the parties reasonably believe to be necessary or desirable
for registration or protection of such trademark or trademarks in the name of
Jeter. All costs related to any such trademarks shall be borne by Company,
and ownership of any such trademarks shall rest solely in the name of Turn 2
or its designee. Upon registration of any such trademark, Turn 2 shall grant
to Company a license for the use of such registered trademark on or in
connection with the advertisement, promotion and sale of Endorsed Products,
which license shall be coextensive and coterminous with the rights granted
thereunder with respect to Jeter Identification and shall require no increase
in the payments set forth but shall contain such additional provisions as
Turn 2 reasonably believes are necessary for the protection of such trademark
registered in the name of Jeter or Turn 2. Company agrees that it will not
file, during the Contract Period or thereafter, any application for trademark
registration or otherwise obtain or attempt to obtain ownership of any
trademark or trade name within the Contract Territory or in any other country
of the world which consists of Jeter Identification or any mark, design or
logo intended to make reference to Jeter or to identify products endorsed by
Jeter. In the event that, prior to the Contract Period, Company has filed
one or more applications for registration of any such trademark, or otherwise
has obtained any rights to such trademark, Company agrees to cause such
applications and/or trademarks to be assigned and transferred to Turn 2
forthwith.
9. Products for the Use of Turn 2. During the Contract Period,
Company shall supply Turn 2 and/or its agent with such amounts of Endorsed
Products as Turn 2 and/or its agent may reasonably request. Company agrees
to pay all charges in connection with the delivery of Endorsed Products to
Turn 2 and/or Turn 2's agent, including shipping charges, air freight charges
and customs charges. Company agrees to reimburse Turn 2's authorized agent
for all such expenses incurred by it in connection with the transfer of
Endorsed Products to Turn 2 and/or Turn 2's agent.
10. Services of Jeter. If Company desires to utilize the services of
Jeter as a model in connection with photographs or drawings for advertising
or for personal appearances, Turn 2 agrees, at the reasonable request of
Company and upon adequate notice, to provide the services of Jeter at a time
and place reasonably convenient to the schedule of Jeter. Company agrees
that it will reimburse Turn 2 for reasonable travel (including first class
air fare), lodging, ground transportation and meal expenses incurred by Jeter
and one traveling companion designated by Jeter. Company further agrees it
will reimburse Turn 2's authorized agent for reasonable travel (including air
fare), lodging and meal expenses incurred in providing one representative to
-5-
<PAGE>
accompany Jeter. Company understands that if services are requested
hereunder, such services may be coordinated with similar services for others
entitled to the use of Jeter Identification in other connections. Company
further understands that such services may be required not more than once
during the Contract Period for up to one (1) hour, In the event that Company
elects to use the services of Jeter in connection with television
advertising, Company shall make all required union scale and union pension
and welfare payments. Company further understands that failure to utilize
services of Jeter pursuant to this section shall not result in any reduction
in payments to Turn 2 hereunder, nor may the obligation to provide services
be carried past the Contract Period. The obligations of Turn 2 to provide
the services of Jeter hereunder are subject to the condition that payments to
Turn 2 are current and up to date.
11. Force Majeure. If, at any time during this Agreement, Turn 2 or
Jeter is prevented from or hampered or interrupted or interfered with in any
manner whatever in fully performing its/his duties hereunder, by reason of
any present or future statute, law, ordinance, regulation, order, judgment or
decree, whether legislative, executive or judicial (whether or not valid),
act of God, earthquake, fire, flood, epidemic, accident, explosion, casualty,
lockout, boycott, strike, labor controversy (including but not limited to
threat of lockout, boycott or strike), riot, civil disturbance, war or armed
conflict (whether or not there has been an official declaration of war or
official statement as to the existence of a state of war), invasion,
occupation, intervention of military forces, act of public enemy, embargo,
delay of a common carrier, inability without default on Company's part to
obtain sufficient material, labor, transportation, power or other essential
commodity required in the conduct of its business; or by reason of any cause
beyond his reasonable control; or by reason of any other cause of any similar
nature (all of the foregoing being herein referred to as an "event of force
majeure"), then Turn 2's/Jeter's obligations hereunder shall be suspended as
often as any such event of force majeure occurs and during such periods of
time as such events of force majeure exist and such non-performance shall not
be deemed to be a breach of this Agreement.
12. Default. (a) If either party at any time during the Contract
Period shall (i) fail to make any payment of any sum of money herein
specified to be made, or (ii) fail to observe or perform any of the
covenants, agreements or obligations hereunder (other than the payment of
money), the non-defaulting party may terminate this Agreement as follows: as
to subparagraph (i) if such payment is not made within ten (10) days after
the defaulting party shall have received written notice of such failure to
make payment, or as to subparagraph (ii) if such default is not cured within
thirty (30) days after the defaulting party shall have received written
notice specifying in reasonable detail the nature of such default. In order
to be a sufficient notice hereunder, any such written notice shall specify in
detail each item of default and shall specify the provision of this Agreement
which applies to each item of default, and shall specify in detail the action
the defaulting party must take in order to cure each such item of default.
The termination rights set forth in this section shall not constitute the
exclusive remedy of the nondefaulting party hereunder, however, and if
default is made by either party hereunder, the other may resort to such other
remedies as said party would have been entitled to if this section had
-6-
<PAGE>
been omitted from this Agreement. Termination under the provisions of this
section shall be without prejudice to any rights or claims which the
terminating party may otherwise have against the defaulting party.
(b) Notwithstanding anything herein to the contrary, the cure periods
set forth in subparagraphs (a)(i) and (a)(ii) above only apply to Company's
first default under this Agreement. Accordingly, Turn 2 may, after Company's
first default has occurred under either subparagraph (a)(i) or subparagraph
(a)(ii) above and has been cured, thereafter immediately terminate this
Agreement upon any further defaults by Company hereunder without providing
Company an opportunity to cure any additional defaults.
13. Termination. From and after the termination of the Contract
Period all of the rights of Company to the use of Jeter Identification shall
cease absolutely and Company shall not thereafter use or refer to Jeter
Identification in advertising or promotion in any manner whatsoever, it being
understood by Company that Jeter Identification may be used at any time by
others in connection with the advertisement and promotion of Products the
shipment of which is completed after the termination of the Contract Period.
It is further agreed that following termination of the Contract Period,
Company shall not advertise, promote, distribute or sell any item whatsoever
in connection with the use of any name, figure, design, logo, trademark or
trade name similar to or suggestive of Jeter Identification.
14. Inventory of Endorsed Products on Termination/Expiration. Any
Endorsed Products that may have been manufactured by or for Company prior to
the termination or expiration of the Contract Period may be sold by Company
during the ninety (90) day period next following the date of termination or
expiration; provided, however, that Company shall have no such rights unless
(a) Company is not in default of any of its obligations hereunder on the date
of termination or expiration, (b) within fifteen (15) days after the date of
termination or expiration, Company shall furnish to Turn 2 a written
statement of the number and description of Endorsed Products actually in
stock on the date of termination or expiration, (c) the quantity of Endorsed
Products in stock on the date of termination or expiration is not in excess
of a reasonable inventory based upon Company's selling requirements of
Endorsed Products during the Contract Period, (d) Company shall continue to
pay to Turn 2 with respect to such sales a royalty at the rates specified
herein, and (e) royalties payable pursuant to this section shall be paid
within thirty (30) days following the end of each calendar month with respect
to shipments made during such month.
15. Major League Baseball Trademarks. Nothing contained herein shall be
construed to convey to Company any rights to use the trademarks, logos or
uniform of the New York Yankees, Major League Baseball or any other
professional or amateur baseball association (including any member clubs or
teams of such association) in conjunction with the rights granted hereunder.
All rights to the use of such trademarks, logos or team identification must be
-7-
<PAGE>
acquired from the New York Yankees, Major League Baseball, or any other
appropriate rights holder.
16. Indemnity. Company agrees to protect, indemnify and save
harmless Turn 2, Turn 2's agent and Jeter, or any of them, from and against
any and all expenses, damages, claims, suits, actions, judgments and costs
whatsoever, including reasonable attorneys' fees, arising out of, or in any
way connected with, this Agreement, Company's default hereunder, the
negligence, actions, errors or omissions of Company or any claim or action
for personal injury, death or otherwise involving alleged defects in
Company's Products, provided that Company shall be given notice of any such
action or claim. Company agrees to provide and maintain, at its own expense,
general liability insurance and product liability insurance with limits no
less than $3,000,000 and within thirty (30) days from the date hereof,
Company will submit to Turn 2 a fully paid policy or certificate of insurance
naming Turn 2, Turn 2's agent and Jeter as additional insured parties,
requiring that the insurer shall not terminate or materially modify such
without written notice to Turn 2 at least twenty (20) days in advance
thereof.
17. Waiver. The failure of either party at any time or times to
demand strict performance by the other of any of the terms, covenants or
conditions set forth herein shall not be construed as a continuing waiver or
relinquishment thereof and each may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
18. Bankruptcy. If Company shall become bankrupt or insolvent, or if
Company's business shall be placed in the hands of a Receiver, Assignee or
Trustee, whether by voluntary act of Company or otherwise, the Contract
Period shall, at the option of Turn 2, immediately terminate.
19. Assignment. This Agreement shall bind and inure to the benefit of
Turn 2 and the successors and assigns of Turn 2. Nothing herein shall
prevent Turn 2 from assigning the monetary benefits of this Agreement as it
may so desire. Further, inasmuch as it is recognized that Turn 2 is the
representative of Jeter, Turn 2 may at any time assign this Agreement to
Jeter and, in such event, Turn 2 shall have no further obligation or
liability in connection herewith and Turn 2's position vis-a-vis Company in
connection herewith shall be in all respects the same as if Turn 2 had signed
this Agreement as agent rather than as principal from the beginning. The
rights granted Company hereunder shall be used only by it and shall not,
without the prior written consent of Turn 2, be transferred or assigned to
any other. In the event of the merger or consolidation of Company with any
other entity, Turn 2 shall have the right to terminate the Contract Period by
so notifying Company in writing on or before sixty (60) days after Turn 2 has
received notice of such merger or consolidation.
20. Arbitration. In the event a dispute arises under this agreement
which cannot be resolved, such dispute shall be submitted to arbitration and
resolved by a single arbitrator (who shall be a lawyer) in accordance with
the Commercial Arbitration Rules of the American
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<PAGE>
Arbitration Association then in effect. All such arbitration shall take
place at the office of the American Arbitration Association located in New
York, New York. Each party is entitled to depose one (1) fact witness and
any expert witness designated by the other party, and to conduct such other
discovery as the arbitrator deems appropriate. The award or decision
rendered by the arbitrator shall be final, binding and conclusive and
judgment may be entered upon such award by any court.
21. Significance of Headings. Section headings contained herein are
solely for the purpose of aiding in speedy location of subject matter and are
not in any sense to be given weight in the construction of this Agreement.
Accordingly, in case of any question with respect to the construction of this
Agreement, it is to be construed as though such section headings had been
omitted.
22. Entire Agreement. This writing constitutes the entire agreement
between the parties hereto and may not be changed or modified except by a
writing signed by the party or parties to be charged thereby.
23. Governing Law. This Agreement shall be governed and construed
according to the law of New York.
24. Reservation of Rights. All rights not herein specifically
granted to Company shall remain the property of Turn 2 to be used in any
manner Turn 2 deems appropriate. Company understands that Turn 2 has
reserved to itself the right to authorize others to use Turn 2 Identification
within the Contract Territory and during the Contract Period in connection
with all tangible and intangible items and services other than Products
themselves.
25. No Joint Venture. This Agreement does not constitute and shall
not be construed as constituting a partnership or joint venture between Turn
2 and Company. Neither party shall have any right to obligate or bind the
other party in any manner whatsoever, and nothing herein contained shall
give, or is intended to give, any rights of any kind to any third person.
26. Authorization. The execution, delivery and performance of this
Agreement by Company and by Turn 2 has been duly authorized and approved by
the Board of Directors of Company and by the Board of Directors of Turn 2 and
constitutes a valid and binding obligation of Company and of Turn 2
enforceable in accordance with its terms.
27. Execution and Delivery . This instrument shall not be considered
to be an agreement or contract nor shall it create any obligation whatsoever
on the part of Turn 2 and Company, or either of them, unless and until it has
been personally signed by a representative of Turn 2 and by a representative
of Company and delivery has been made of a fully signed original. Acceptance
of the offer made herein is expressly limited to the terms of the offer.
-9-
<PAGE>
28. Liability. In no event (including, but not limited to, Jeter's
or Turn 2's default hereunder) shall Jeter or Turn 2 be liable to Company (or
any entity claiming through Company) for any amount in excess of the amounts
of royalties actually received by Turn 2 hereunder, excluding the
reimbursement of expenses. Under no circumstances will Jeter or Turn 2, on
the one hand, or Company, on the other hand, be liable to the other or any
other entity for any special, consequential, indirect, exemplary and/or
punitive damages, or for loss of good will or business profits.
IN WITNESS WHEREOF, the par-ties hereto have caused this Agreement to
be executed as of the date first above written.
FAMOUS FIXINS, INC. TURN 2, INC.
By: /s/ Jason Bauer By: /s/ Derek Jeter
--------------------- ------------------------
Jason Bauer Derek Jeter
President President
-10-
EXHIBIT 10.13
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 13th day of May 1999, by
and between Famous Fixins, Inc. ('Licensee"), a corporation organized under
the laws of the State of New York, having its principal place of business at
250 West 57th street, Suite 2501, New York, NY 10107, and Jake "The Snake"
Enterprises ("Licensor"), a corporation organized under the State of Arizona,
having its principal place of business at ________________________________.
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the name and likeness of Licensor
on and in connection with the development, manufacture, distribution,
promotion, and sale of a line of cereal products named "Jake's Flakes"
endorsed by Licensor ("the Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, photograph, characterization, likeness, voice, image, and
biographical data of Licensor, and the trademarks, logos, copyrights and all
other authorized material owned or controlled by the Licensor (the "Licensed
Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Products ("the License"), This
License shall be effective worldwide from the date of this executed contract
until terminated m accordance with the terms and conditions of Paragraphs 8
or 9 of this Agreement ("the licensed term").
2. Licensee's Obligations. Licensee agrees to develop, manufacture,
distribute, promote, and sell the Products, provided, ha that Licensee shall
in its sole and absolute discretion have the right to determine: (a) the
type and quantity of Products developed and manufactured; (b) the markets in
which the Products are distributed and sold; (c) the manner of distribution
and sale of the Products; and (d) the volume and nature of advertising for
the Products, Licensee shall pay all costs and expenses in connection with
the development promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the Products. All rights, titles, and interests in
and to the Products, their formulae and secret ingredients, and their
packaging and labeling shall be, and they are specifically and entirely,
reserved to Licensee and may be fully exploited without regard to the extent
to which such rights may be competitive with this Agreement or the rights
granted hereunder. No cross promotions, or commercial tie-ins with other
products or premium items can be implemented without the expressed written
consent of Licensor.
3. Licensor's Obligations. Licensor shall supply the Licensed Subject
Matter and personal appearance for the purposes of a press conference at the
reasonable request of Licensee to assist in the promotion of the Products.
All services will be rendered on mutually agreeable dates and locations. Any
additional participation is at the sole discretion of Licensor. Any
reasonable transportation expenses incurred at such appearances will be the
responsibility of Licensee. Licensee shall further Licensee with sufficient
information about the Licensor's schedule to adequately plan its promotions
and sales programs. Any and all publicity regarding the Products shall be
issued only by Licensee, subject to prior approval by Licensor ,which shall
not be unreasonable withheld.
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensor's approval the packaging design, advertising material and all other
materials to be used in connection with the Products, which approval shall
not be unreasonably delayed or withheld.
5. Compensation. For full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensor completely perform his
1
<PAGE>
obligations hereunder, Licensee shall pay Licensor a license fee (the
"Licensing Fee") in an amount equal to ***** percent (*****%) of all monies
received by Licensee as revenue derived from the sale of the Products ("Gross
Receipts"). Licensor will also receive ***** percent (*****%) of net profits
(Gross Sales less the cost of goods sold) derived from the sale of merchandise
from the back panel or elsewhere on the packaging or promotional materials of
the Products. Licensor, or a third-party supplier designated by Licensor,
shall have the first right to supply such merchandise, provided however, that
Licensor or his designated supplier is competitive with bona fida offers
available to Licensee from other suppliers with respect to any material
conditions established by Licensee including, price, quality and delivery
schedules for such merchandise. In addition, as further consideration for
this Agreement, Licensor has received a warrant to purchase ***** shares of
the Company's unregistered common at the purchase price of $***** per share
(the "exercise price") with an expiration date of five (5) years from the date
hereof.
6. Accounting. Licensee shall render a detailed accounting to
Licensor on. a quarterly basis within 60 days after the first day of January,
April, July, and October. Each accounting shall show both quarterly and
cumulative Gross Receipts for the Products and shall be accompanied by the
payment in full then due to the Licensor. Licensor, or Licensor's
representative shall have the right at all reasonable times to inspect and
make copies of the books and records of company, at Licensor's expense, in so
far as they relate to the computation of royalties to be paid to Licensor
thereunder and the shipment of endorsed products and related merchandise
pursuant to this agreement.
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee bearing Licensor's
name and likeness. Licensee will name Licensor as a additional insured to
its product liability insurance policy.
8. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy; (c) quality standards as required by
industry are not met or (d) Licensee permanently discontinues production of
the Products.
9. License Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; (b) Licensor becomes insolvent or
files a petition in bankruptcy; (c) Licensee determines, in its sole and
absolute discretion, to discontinue production and distribution of the
Products; (d) Licensor becomes the subject of public dispute or scandal that
affects Licensor's image. All royalties due to Licensor up to the date of
termination will be paid to Licensor
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgements, penalties, liabilities, damages,
costs and expenses, including, without limitation, reasonable attorney's fees
and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made
pursuant to this agreement, or through the negligence or intentional acts of
its officers, directors, employees, or representatives, or including product
liability.
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
substantial portion of Licensee's stock or assets. Licensee will remain
liable for Licensor's royalty if not paid by assignee.
12. Notices. Any notice to be hereunder shall be made in writing and
shall be sent by certified U.S. mail, return receipt requested, postage paid.
All notices to Licensor shall be sent to Jake Plummer,
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
c/o ISI 1 Meadowlands Plaza, Suite 1501, East Rutherford, NJ 07073. All
notices to Licensee shall be sent to 250 West 57th St., Suite 2501, New York,
NY 10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be
construed and enforced in the County of New York in accordance with the laws
of the State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith m
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement so forth the entire
understanding of the parties with respect to the subject matter. No waiver,
modification, or addition to this Agreement shall be valid unless reduced to
writing and signed by both parties. If any provision of this Agreement shall
be held void, voidable, invalid, or inoperative, no other provision of this
Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
provision is held void, voidable, invalid, or inoperative and impairs
Licensee's right to manufacture, distribute, promote, or sell the Products,
then Licensee may, upon notice to Licensor, terminate this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement in New
York New York, on this day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
-------------------------
Jason Bauer, President
LICENSOR: /s/ Jake Plummer
----------------------------
Jake Plummer
3
EXHIBIT 10.14
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
ENDORSEMENT AGREEMENT
THIS ENDORSEMENT AGREEMENT (this "Agreement"), made and entered into as
of May 31, 1999, by and between FAMOUS FIXINS, INC., 250 West 57th Street,
Suite 2501, New York, New York 10107 ("Company") and PEY DIRT, INC. ("Pey
Dirt").
WITNESSETH
WHEREAS, Company desires to obtain the right to use the name, likeness
and endorsement of Peyton Manning (hereinafter called "Manning") in
connection with the advertisement, promotion and sale of Company's "Products"
(hereinafter defined); and
WHEREAS, Manning has granted such rights to Pey Dirt together with the
right to sublicense such rights.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and conditions herein contained, the parties do hereby agree
as follows:
1. Definitions. As used herein, the following terms shall be
defined as set forth below:
(a) "Contract Period" shall mean that period of time commencing as of
May 31, 1999 and concluding May 31, 2000.
(b) "Contract Territory" shall mean the states of Indianapolis and
Tennessee and Company's e-commerce site.
(c) "Contract Year Quarter" shall mean each 3 consecutive month
period occurring during any Contract Year ("Contract Year" meaning any twelve
month period herein commencing as of June 1) (so that, by way of example, the
first Contract Year Quarter of the first Contract Year commences as of June
1, 1999, the second commences on September 1, 1999, etc.).
(d) "Endorsed Products" shall mean all Products of Company which have
the Manning Identification (defined below) highlighted as a part thereof (in
the Products' name or otherwise) or which are shipped in containers or
packages bearing the Manning Identification.
(e) "Manning Identification" shall mean any words or symbols or
photographic or graphic representations or combinations thereof which
identify Manning such as, for example, the name and likeness of Manning.
<PAGE>
(f) "Premium Program" shall mean any traffic builder, third party
tie-in program or other program involving the use of a premium and shall
include any program primarily designed to attract the consumer to purchase a
product or service other than Endorsed Products themselves.
(g) "Products" shall mean cold breakfast cereals.
2. Grant of Endorsement Rights. (a) Pey Dirt grants to Company the
exclusive right and license to use Manning Identification within the Contract
Territory during the Contract Period in connection with the advertisement and
promotion by Company of Products in television, radio, print and point of
purchase. Pey Dirt also grants to Company, subject to all of the terms and
conditions herein, the non-exclusive right to use the Manning Identification
in connection with certain merchandise that may be featured on the back panel
of the Endorsed Products packaging, said merchandise to be subject to Pey
Dirt's sole and exclusive discretion and approval. Notwithstanding anything
herein to the contrary, it is specifically agreed that the Manning
Identification cannot be used, in whole or in part, in connection with (i)
Premium Programs and/or (ii) any multi-media use except for Company's e-
commerce site. Pey Dirt expressly agrees that the right to use Manning
Identification will not be granted to anyone other than Company for use
within the Contract Territory during the Contract Period in connection with
the advertisement, promotion and sale of Products. Anything herein to the
contrary notwithstanding, Company shall not have the right to distribute
photographs of Manning which are larger than 5" x 7".
(b) Company agrees that during the Contract Period it will use its
best efforts actively and aggressively to (i) promote the sale of all
Endorsed Products in the Contract Territory, and (ii) prevent the sale of any
Endorsed Products outside the Contract Territory. Failure of Company to
comply with the provisions of this Section 2(b) shall entitle Pey Dirt to
revoke this license immediately (notwithstanding any other provision in this
Agreement to the contrary).
(c) Pey Dirt has the right to terminate this Agreement immediately if
Company's Endorsed Products are not being distributed in the Contract
Territory to a significant number of stores by October 1, 1999.
3. Approvals. Company agrees that no use whatsoever of Manning
Identification nor any item used in connection with Manning Identification
(including, without limitation, advertising) will be made hereunder unless
and until the same has been approved by Pey Dirt. Pey Dirt agrees that any
material, advertising or otherwise, submitted for approval as provided herein
may be deemed by Company to have been approved hereunder if the same is not
disapproved in writing within fourteen (14) days after receipt thereof.
Pey Dirt agrees that any material submitted hereunder will not be
unreasonably disapproved and, if it is disapproved, that Company will be
advised of the specific grounds therefor. Company agrees to protect,
indemnify and save harmless Pey Dirt and Manning, or either of them, from and
against any and
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<PAGE>
all expenses, damages, claims, suits, actions, judgments and
costs whatsoever, arising out of, or in any way connected with, any
advertising material furnished by, or on behalf of, Company.
4. Remuneration. (a) Within thirty (30) days following the
conclusion of each Contract Year Quarter, Company shall deliver to Pey Dirt
an itemized statement setting forth the total shipments of Endorsed Products
during said Contract Year Quarter and, at the same time, shall pay to Pey
Dirt a royalty with respect to such shipments as hereinafter provided. Such
royalties shall be based upon the actual invoice price of such shipments,
exclusive only of shipping charges and sales taxes, and shall be at the rate
of *****% of the total of said invoice prices with a minimum invoice price
of $2.50 per box.
(b) In addition to the royalty payments set forth above, Company
agrees to grant Pey Dirt an option to purchase an aggregate of ***** shares
of Company's publicly traded and registered stock (the "Shares") at an
exercise price of $***** per share (the "Option"), which Option shall vest
and become unrestricted when the SEC declares Company's registration
statement effective (anticipated to be no later than November 30, 1999) and
shall be exercisable until June 30, 2004. As further inducement to Pey Dirt
to enter into this Agreement, Company and Pey Dirt will enter into that
certain Option Agreement dated as of the date of this Agreement, which shall
govern all aspects of the Option.
(c) Further, Pey Dirt will be entitled to ***** percent
(*****%) of all gross profits (i.e., gross revenues less only Company's
actual out-of-pocket costs of obtaining the raw merchandise) generated from
merchandise related to the Endorsed Products and/or the Manning
Identification, said merchandise to be advertised exclusively on the back
panel of each box of Endorsed Products. Except for the advertising of
merchandise related to the Endorsed Products and/or the Manning
Identification, no other use of the back panel of each box of Endorsed
Products is permitted without Pey Dirt's prior written consent. It is agreed
that all such merchandise must be mutually approved in all respects by the
parties hereto, including, without limitation, the style, design and cost
thereof.
(d) In addition to and separate from any other remuneration
hereunder, if Company uses any performance or service of Manning hereunder in
any way that is subject to the jurisdiction of any applicable artists' union,
guild or other organization (including, without limitation, SAG and AFTRA),
either during or after the Contract Period, Company shall pay directly to
such organization all minimum payments or fees (for benefit plans or
otherwise) required to be made with respect to Manning's performance or
services.
(e) If, at any time during the Contract Period, Company shall enter
into any agreement (the terms of what are significantly the same as the terms
hereof) in connection with the production and sale of Company's products
using the name, likeness, photographic representation or signature of any
other National Football League quarterback (active or retired), which
agreement provides for the payment to such individual of remuneration in
excess of that set forth herein, then Company agrees it will immediately so
notify Pey Dirt
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***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
and, at the same time, shall, retroactive to the effective
date of such other agreement, increase the rate of remuneration paid to Pey
Dirt hereunder up to the highest then-current rate paid by Company to any
such National Football League quarterback (active or retired) for a regional
endorsement deal.
5. Notices and Submissions. Pey Dirt hereby designates
International Merchandising Corporation, IMG Center, Suite 100, 1360 East 9th
Street, Cleveland, Ohio 44114, Attn.: Peter Johnson, as Pey Dirt's authorized
agent for all purposes hereunder. All notices, submissions and/or requests
for approval to be made, obtained or delivered by Company to Pey Dirt
pursuant to this Agreement shall be delivered to said address free of all
charges such as, for example, shipping charges and customs charges. In the
event that any such charges are paid by Pey Dirt or by Pey Dirt's authorized
agent, Company agrees to make prompt reimbursement.
6. Payments; Books and Records. (a) Pey Dirt may elect to have
payments made by check, wire transfer or bank transfer. Unless such election
has been made in writing, all payments shall be made by check drawn to the
order of "Pey Dirt, Inc." and delivered to IMG, Suite 100, 1360 East 9th
Street, Cleveland, Ohio 44114, Attn.: Peter Johnson. Past due payments
hereunder shall bear interest at the rate of (i) one and one-half percent
(1-1/2%) per month, or (ii) the maximum interest rate permissible under
law, whichever is less.
(b) Company agrees that it will keep accurate and complete records
and books of account showing all Endorsed Products shipped by it and the
price thereof. Pey Dirt, or its representatives, shall, upon two weeks'
written notice, have the right at all reasonable times (prior to the
expiration of two (2) years after the termination of the Contract Period) to
inspect and make copies of the books and records of Company insofar as they
shall relate to the computation of royalties to be paid to Pey Dirt hereunder
and the shipment of Endorsed Products pursuant to this Agreement. In the
event that any such inspections show an underreporting and underpayment in
excess of five percent (5%) for any twelve (12) month period, then Company
shall pay the cost of such examination.
7. Labels/Packaging. (a) It is understood that each of the Endorsed
Products shipped by Company or its container or the packaging therefor shall
have affixed thereto a label or other permanent identification which includes
Manning Identification.
(b) It is hereby agreed that the back panel of the Endorsed Products'
packaging will feature ad copy or offers as determined by Pey Dirt and its
agent, subject to Company's right to reasonably reject such materials only if
such materials are clearly offensive to a majority of the populace. Any and
all revenues generated by such ad copy or offers shall be disbursed in
accordance with Section 4(c) above. Further, the side panel of the Endorsed
Products packaging shall feature a charity or other entity of Manning's sole
choice. All packaging costs shall be Company's sole responsibility.
-4-
<PAGE>
8. Trademarks. Should Company, at any time or times during the
Contract Period, desire to register a trademark or trademarks which include
Manning Identification, or which relate in any manner to Manning, and/or to
register Company as a user thereof, Pey Dirt shall execute any and all
documents which the parties reasonably believe to be necessary or desirable
for registration or protection of such trademark or trademarks in the name of
Manning. All costs related to any such trademarks shall be borne by Company,
and ownership of any such trademarks shall rest solely in the name of Pey
Dirt or its designee. Upon registration of any such trademark, Pey Dirt
shall grant to Company a license for the use of such registered trademark on
or in connection with the advertisement, promotion and sale of Endorsed
Products, which license shall be coextensive and coterminous with the rights
granted thereunder with respect to Manning Identification and shall require
no increase in the payments set forth but shall contain such additional
provisions as Pey Dirt reasonably believes are necessary for the protection
of such trademark registered in the name of Manning or Pey Dirt. Company
agrees that it will not file, during the Contract Period or thereafter, any
application for trademark registration or otherwise obtain or attempt to
obtain ownership of any trademark or trade name within the Contract Territory
or in any other country of the world which consists of Manning Identification
or any mark, design or logo intended to make reference to Manning or to
identify products endorsed by Manning. In the event that, prior to the
Contract Period, Company has filed one or more applications for registration
of any such trademark, or otherwise has obtained any rights to such
trademark, Company agrees to cause such applications and/or trademarks to be
assigned and transferred to Pey Dirt forthwith.
9. Products for the Use of Pey Dirt. During the Contract Period,
Company shall supply Pey Dirt and/or its agent with such amounts of Endorsed
Products as Pey Dirt and/or its agent may reasonably request. Company agrees
to pay all charges in connection with the delivery of Endorsed Products to
Pey Dirt and/or Pey Dirt's agent, including shipping charges, air freight
charges and customs charges. Company agrees to reimburse Pey Dirt's
authorized agent for all such expenses incurred by it in connection with the
transfer of Endorsed Products to Pey Dirt and/or Pey Dirt's agent.
10. Services of Manning. If Company desires to utilize the services
of Manning as a model in connection with photographs or drawings for
advertising or for personal appearances, Pey Dirt agrees, at the reasonable
request of Company and upon adequate notice, to provide the services of
Manning at a time and place reasonably convenient to the schedule of Manning.
Company agrees that it will reimburse Pey Dirt for reasonable travel
(including first class air fare), lodging, ground transportation and meal
expenses incurred by Manning and one traveling companion designated by
Manning. Company further agrees it will reimburse Pey Dirt's authorized
agent for reasonable travel (including air fare), lodging and meal expenses
incurred in providing one representative to accompany Manning. Company
understands that if services are requested hereunder, such services may be
coordinated with similar services for others entitled to the use of Manning
Identification in other connections. Company further understands that such
services may be required not more than once during the Contract Period for up
to one (1) hour. In the event that Company elects to use the services of
Manning in connection with television
-5-
<PAGE>
advertising, Company shall make all required union scale and union pension
and welfare payments. Company further understands that failure to utilize
services of Manning pursuant to this section shall not result in any
reduction in payments to Pey Dirt hereunder, nor may the obligation to
provide services be carried past the Contract Period. The obligations of
Pey Dirt to provide the services of Manning hereunder are subject to the
condition that payments to Pey Dirt are current and up to date.
11. Force Majeure. If, at any time during this Agreement, Pey Dirt
or Manning is prevented from or hampered or interrupted or interfered with in
any manner whatever in fully performing its/his duties hereunder, by reason
of any present or future statute, law, ordinance, regulation, order, judgment
or decree, whether legislative, executive or judicial (whether or not valid),
act of God, earthquake, fire, flood, epidemic, accident, explosion, casualty,
lockout, boycott, strike, labor controversy (including but not limited to
threat of lockout, boycott or strike), riot, civil disturbance, war or armed
conflict (whether or not there has been an official declaration of war or
official statement as to the existence of a state of war), invasion,
occupation, intervention of military forces, act of public enemy, embargo,
delay of a common carrier, inability without default on Company's part to
obtain sufficient material, labor, transportation, power or other essential
commodity required in the conduct of its business; or by reason of any cause
beyond his reasonable control; or by reason of any other cause of any similar
nature (all of the foregoing being herein referred to as an "event of force
majeure"), then Pey Dirt's/Manning's obligations hereunder shall be suspended
as often as any such event of force majeure occurs and during such periods of
time as such events of force majeure exist and such non-performance shall not
be deemed to be a breach of this Agreement.
12. Default. (a) If either party at any time during the Contract
Period shall (i) fail to make any payment of any sum of money herein
specified to be made, or (ii) fail to observe or perform any of the
covenants, agreements or obligations hereunder (other than the payment of
money), the non-defaulting party may terminate this Agreement as follows: as
to subparagraph (i) if such payment is not made within ten (10) days after
the defaulting party shall have received written notice of such failure to
make payment, or as to subparagraph (ii) if such default is not cured within
thirty (30) days after the defaulting party shall have received written
notice specifying in reasonable detail the nature of such default. In order
to be a sufficient notice hereunder, any such written notice shall specify in
detail each item of default and shall specify the provision of this Agreement
which applies to each item of default, and shall specify in detail the action
the defaulting party must take in order to cure each such item of default.
The termination rights set forth in this section shall not constitute the
exclusive remedy of the nondefaulting party hereunder, however, and if
default is made by either party hereunder, the other may resort to such other
remedies as said party would have been entitled to if this section had
been omitted from this Agreement. Termination under the provisions of this
section shall be without prejudice to any rights or claims which the
terminating party may otherwise have against the defaulting party.
-6-
<PAGE>
(b) Notwithstanding anything herein to the contrary, the cure periods
set forth in subparagraphs (a)(i) and (a)(ii) above only apply to Company's
first default under this Agreement. Accordingly, Pey Dirt may, after
Company's first default has occurred under either subparagraph (a)(i) or
subparagraph (a)(ii) above and has been cured, thereafter immediately
terminate this Agreement upon any further defaults by Company hereunder
without providing Company an opportunity to cure any additional defaults.
13. Termination. From and after the termination of the Contract
Period all of the rights of Company to the use of Manning Identification
shall cease absolutely and Company shall not thereafter use or refer to
Manning Identification in advertising or promotion in any manner whatsoever,
it being understood by Company that Manning Identification may be used at any
time by others in connection with the advertisement and promotion of Products
the shipment of which is completed after the termination of the Contract
Period. It is further agreed that following termination of the Contract
Period, Company shall not advertise, promote, distribute or sell any item
whatsoever in connection with the use of any name, figure, design, logo,
trademark or trade name similar to or suggestive of Manning Identification.
14. Inventory of Endorsed Products on Termination/Expiration. Any
Endorsed Products that may have been manufactured by or for Company prior to
the termination or expiration of the Contract Period may be sold by Company
during the ninety (90) day period next following the date of termination or
expiration; provided, however, that Company shall have no such rights unless
(a) Company is not in default of any of its obligations hereunder on the date
of termination or expiration, (b) within fifteen (15) days after the date of
termination or expiration, Company shall furnish to Pey Dirt a written
statement of the number and description of Endorsed Products actually in
stock on the date of termination or expiration, (c) the quantity of Endorsed
Products in stock on the date of termination or expiration is not in excess
of a reasonable inventory based upon Company's selling requirements of
Endorsed Products during the Contract Period, (d) Company shall continue to
pay to Pey Dirt with respect to such sales a royalty at the rates specified
herein, and (e) royalties payable pursuant to this section shall be paid
within thirty (30) days following the end of each calendar month with respect
to shipments made during such month.
15. Collegiate/National Football League Trademarks. Nothing contained
herein shall be construed to convey to Company any rights to use the
trademarks, logos or uniform of the University of Tennessee, the Indianapolis
Colts, the National Football League or any other professional or amateur
football association (including any member clubs or teams of such
association) in conjunction with the rights granted hereunder. All rights to
the use of such trademarks, logos or team identification must be acquired
from the University of Tennessee, the Indianapolis Colts, the National
Football League, or any other appropriate rights holder.
16. Indemnity. Company agrees to protect, indemnify and save
harmless Pey Dirt, Pey Dirt's agent and Manning, or any of them, from and
against any and all expenses, damages, claims, suits, actions, judgments and
costs whatsoever, including reasonable attorneys' fees,
-7-
<PAGE>
arising out of, or in any way connected with, this Agreement, Company's
default hereunder, the negligence, actions, errors or omissions of Company
or any claim or action for personal injury, death or otherwise involving
alleged defects in Company's Products, provided that Company shall be given
notice of any such action or claim. Company agrees to provide and maintain,
at its own expense, general liability insurance and product liability
insurance with limits no less than $3,000,000 and within thirty (30) days
from the date hereof, Company will submit to Pey Dirt a fully paid policy or
certificate of insurance naming Pey Dirt, Pey Dirt's agent and Manning as
additional insured parties, requiring that the insurer shall not terminate
or materially modify such without written notice to Pey Dirt at least twenty
(20) days in advance thereof.
17. Waiver. The failure of either party at any time or times to
demand strict performance by the other of any of the terms, covenants or
conditions set forth herein shall not be construed as a continuing waiver or
relinquishment thereof and each may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
18. Bankruptcy. If Company shall become bankrupt or insolvent, or if
Company's business shall be placed in the hands of a Receiver, Assignee or
Trustee, whether by voluntary act of Company r otherwise, the Contract
Period shall, at the option of Pey Dirt, immediately terminate.
19. Assignment. This Agreement shall bind and inure to the benefit of
Pey Dirt and the successors and assigns of Pey Dirt. Nothing herein shall
prevent Pey Dirt from assigning the monetary benefits of this Agreement as it
may so desire. Further, inasmuch as it is recognized that Pey Dirt is the
representative of Manning, Pey Dirt may at any time assign this Agreement to
Manning and, in such event, Pey Dirt shall have no further obligation or
liability in connection herewith and Pey Dirt's position vis-a-vis Company in
connection herewith shall be in all respects the same as if Pey Dirt had
signed this Agreement as agent rather than as principal from the beginning.
The rights granted Company hereunder shall be used only by it and shall not,
without the prior written consent of Pey Dirt, be transferred or assigned to
any other. In the event of the merger or consolidation of Company with any
other entity, Pey Dirt shall have the right to terminate the Contract Period
by so notifying Company in writing on or before sixty (60) days after Pey Dirt
has received notice of such merger or consolidation.
20. Arbitration. In the event a dispute arises under this agreement
which cannot be resolved, such dispute shall be submitted to arbitration and
resolved by a single arbitrator (who shall be a lawyer) in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then
in effect. All such arbitration shall take place at the office of the
American Arbitration Association located in Nashville, Tennessee. Each party
is entitled to depose one (1) fact witness and any expert witness designated
by the other party, and to conduct such other discovery as the arbitrator
deems appropriate. The award or decision rendered by the arbitrator shall be
final, binding and conclusive and judgment may be entered upon such award by
any court.
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<PAGE>
21. Significance of Headings. Section headings contained herein are
solely for the purpose of aiding in speedy location of subject matter and are
not in any sense to be given weight in the construction of this Agreement.
Accordingly, in case of any question with respect to the construction of this
Agreement, it is to be construed as though such section headings had been
omitted.
22. Entire Agreement. This writing constitutes the entire agreement
between the parties hereto and may not be changed or modified except by a
writing signed by the party or parties to be charged thereby.
23. Governing Law. This Agreement shall be governed and construed
according to the law of Tennessee.
24. Reservation of Rights. All rights not herein specifically
granted to Company shall remain the property of Pey Dirt to be used in any
manner Pey Dirt deems appropriate. Company understands that Pey Dirt has
reserved to itself the right to authorize others to use Pey Dirt
Identification within the Contract Territory and during the Contract Period
in connection with all tangible and intangible items and services other than
Products themselves.
25. No Joint Venture. This Agreement does not constitute and shall
not be construed as constituting a partnership or joint venture between Turn
2 and Company. Neither party shall have any right to obligate or bind the
other party in any manner whatsoever, and nothing herein contained shall
give, or is intended to give, any rights of any kind to any third person.
26. Authorization. The execution, delivery and performance of this
Agreement by Company and by Pey Dirt has been duly authorized and approved by
the Board of Directors of Company and by the Board of Directors of Pey Dirt
and constitutes a valid and binding obligation of Company and of Pey Dirt
enforceable in accordance with its terms.
27. Execution and Delivery . This instrument shall not be considered
to be an agreement or contract nor shall it create any obligation whatsoever
on the part of Pey Dirt and Company, or either of them, unless and until it
has been personally signed by a representative of Pey Dirt and by a
representative of Company and delivery has been made of a fully signed
original. Acceptance of the offer made herein is expressly limited to the
terms of the offer.
28. Liability. In no event (including, but not limited to, Manning's
or Pey Dirt's default hereunder) shall Manning or Pey Dirt be liable to
Company (or any entity claiming through Company) for any amount in excess of
the amounts of royalties actually received by Pey Dirt hereunder, excluding
the reimbursement of expenses. Under no circumstances will Manning or Pey
Dirt, on the one hand, or Company, on the other hand, be liable to the other
or any other entity for any special, consequential, indirect, exemplary
and/or punitive damages, or for loss of good will or business profits.
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<PAGE>
IN WITNESS WHEREOF, the par-ties hereto have caused this Agreement to
be executed as of the date first above written.
FAMOUS FIXINS, INC. PEY DIRT, INC.
By: /s/ Jason Bauer By: /s/ Peyton Manning
--------------------- ------------------------
Jason Bauer Peyton Manning
President President
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EXHIBIT 10.15
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 10th day of May 1999, by
and between Famous Fixins, Inc. ("Licensee"), a corporation organized under
the laws of the State of New York, having its principal place of business at
250 West 57th street, Suite 2501, New York, NY 10107, and Alonzo Mourning
("Licensor"), an individual of full age and majority, with an address c/o
Falk Associates Management Enterprises ("FAME"), 5335 Wisconsin Ave, NW,
Suite 850, Washington, DC 20015 (Attn: David Eyl).
WHEREAS, Licensee manufactures celebrity food Products and has been
granted the exclusive right to the use of the name and likeness of Licensor
on and in connection with the development, manufacture, distribution,
promotion, and sale of one (1) cereal product endorsed by Licensor ("the
Product").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, approved photograph, likeness, and biographical data of
Licensor (the "Licensed Subject Matter") in connection with the development,
manufacture, distribution, promotion, and sale of the Product ("the
License"). This License shall be effective worldwide from May 1, 1999
through and including June 30, 2000 (the "Term"), unless terminated in
accordance with the terms and conditions of Paragraphs 8 or 9 below.
Subject to the above provisions, Licensee agrees that Licensor shall
retain all rights in and to the Licensed Subject Matter and, whether during
the Term or any extension thereof, Licensor shall not be prevented from
using, permitting, and/or licensing others to use the Licensed Subject Matter
in connection with the advertisement, promotion, and/or endorsement of any
product or service except for ready-to-eat cereal.
Licensee acknowledges that Licensor has a valid, existing, worldwide
endorsement agreement, which grants exclusive rights to NIKE, Inc. in
connection with shoes and apparel (the "NIKE Agreement"). Pursuant to the
NIKE Agreement, Licensor is permitted to grant Licensee the right to produce,
manufacture, distribute, and sell Licensor approved t-shirts and hats bearing
the logo for "Zo's Summer Groove," a charity event run by Licensor (the
"Apparel Products"), so long as the Apparel Products are manufactured by
NIKE, Inc.
Accordingly, Licensor hereby grants Licensee the right to produce,
manufacture, distribute, and sell the Apparel Products, provided that such
Apparel Products are sold exclusively on the back and side panels of the
packaging of the Product ("Apparel Products"). Licensee agrees that any and
all Apparel Products shall contain a logo for "Zo's Summer Groove," as well
as the logo for the food Product produced. Prior to any manufacture,
promotion, sale, advertisement, and/or distribution of the Apparel Products,
Licensee agrees to submit such Apparel Products to FAME (Attn: David Eyl),
for their prior written approval. Licensee agrees not to manufacture,
promote, sell, advertise, and/or distribute any Apparel Products without
written approval from FAME. Licensee further agrees that Licensee shall be
responsible for any and all costs associated with the manufacture, promotion,
sale, advertisement, and/or distribution of the Apparel Products, and that
Licensor shall bear no costs whatsoever in connection with the Apparel
Products.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Product,
provided, however, that Licensee shall in its sole and absolute discretion
have the right to determine: (a) the type and quantity of Product developed
and manufactured, (b) the markets in which the Product are distributed and
sold; (c) the manner of distribution and sale of the Product; and (d) the
volume and nature of advertising for the Product
1
<PAGE>
(subject to Paragraph Four (4) below). Licensee shall pay all costs and
expenses in connection with the development, promotion, manufacturing,
packaging, shipping, distribution, sales and promotion of the Product. All
rights, titles, and interests in and to the Product, their formulae and
secret ingredients, and their packaging and labeling shall be, and they are
specifically and entirely, reserved to Licensee and may be fully exploited
without regard to the extent to which such rights may be competitive with
this Agreement or the rights granted hereunder.
3. Licensor's Obligation. Licensor agrees to be available for one
(1) personal appearance on behalf of the Licensee for the purposes of
participating in a promotional press conference (the "Personal Appearance").
The Personal Appearance shall last no longer than two (2) hours, and shall
take place in Miami, Florida at a date and time, and location compatible with
Licensor's schedule and which is mutually convenient to Licensor and
Licensee. The Personal Appearance shall be subject to Licensor's
professional commitments. Licensee shall provide first-class round-trip
limousine transportation in connection with the Personal Appearance. Failure
to attend the Personal Appearance by Licensor due to any professional
commitments shall not be deemed to be a breach of this agreement, including
instances wherein Licensor's professional commitments arise after the
scheduling of the Personal Appearance, provided however, that Licensor and
Licensee reschedules the Personal Appearance at a mutually agreeable date,
time, and location, subject to Licensor's professional commitments. In all
such cases, Licensor shall bear no costs whatsoever, including by way of
example, reliance costs of Licensee, for the Personal Appearance. Licensor
shall make a good faith effort to furnish Licensee with sufficient
information about the Licensor's schedule so that Licensee may adequately
prepare its promotions and sales programs. Any and all publicity regarding
the Product shall be issued only by Licensee.
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Product manufactured by or for Licensee
in accordance with quality standards approved by Licensor prior to the
commencement of manufacturing of the Product. Licensee agrees to submit to
Licensor and FAME (Attn: David Eyl), for their approval and review, a copy of
any and all materials utilizing the Licensed Subject Matter at least fourteen
(14) days prior to their release to the general public; and Licensee further
agrees that the same shall not be released without the prior written approval
of FAME. Licensor and FAME agree, however, that they shall not unreasonable
withhold or delay their approval of said materials and that in absence of
disapproval, within ten (10) days of receipt thereof, said advertising and
promotional materials shall be deemed approved.
5. Compensation. For full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement, and
provided that Licensor completely perform his obligations hereunder, Licensee
shall pay Licensor a license fee (the "Licensing Fee") in an amount equal to
***** percent (*****%) of all monies received by Licensee as revenue
derived from the sale of the Product ("Gross Receipts" less slotting fees).
Licensor will also receive ***** percent (*****%) of Net profits
derived from the sale of other related merchandise from the back panel or
elsewhere on the packaging or promotional materials of the Product. "Net
Profits" shall be defined as the aggregate of all revenues received through
the sale and/or distribution of the Apparel Products, less the actual costs
of the Apparel Products incurred by Licensee. In addition, as further
consideration for this Agreement, Licensor has received a warrant to purchase
***** shares of the Company's unregistered common stock at the purchase
price of $***** per share (the "exercise price") with an expiration date of
five (5) years from the date hereof.
6. Accounting. Licensee shall render a detailed accounting to
Licensor on a quarterly basis within 60 days after the first day of January,
April, July, and October. Each accounting shall show both quarterly and
cumulative Gross Receipts for the Product and shall be accompanied by the
payment in full then due to the Licensor.
7. Insurance. Licensee warrants that it has or will obtain, at its
own cost and expense, a commercial general liability insurance policy in the
amount of eight million dollars ($8,000,000) including coverage for Licensor
(the "Policy"). The policy shall be issued by a major insurance carrier
authorized to do business in all jurisdictions where the product is sold, and
shall be maintained
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
until Licensee's performance in connection with this
Agreement has been completed and shall name Licensor as an additional
assured. Licensee shall furnish FAME (Attn: Gene Mason), with a certificate
by no later than May 1, 1999, evidencing such insurance coverage, which shall
state in substantial part:
"Should any of the above described policies be cancelled before the
expiration date thereof, the issuing company will endeavor to mail
ten (10) days written notice to the certificate holder (Licensor)
named to the left."
Failure to obtain insurance shall be considered a breach of this Agreement
and shall give Licensor the right to terminate the Agreement. Upon such
termination, Licensee shall forfeit all monies previously paid to Licensor,
which shall be deemed liquidated damages. In all such instances, Licensee
shall remain liable to Licensor for all compensation under this Agreement.
Such liability shall be in addition to, and not in limitation of, any and all
other remedies available to Licensor in law or equity.
8. Licensor Termination. Licensor may terminate this Agreement upon
thirty (30) days written notice if (a) Licensee breaches a material term of
this Agreement and fails to remedy said breach within fifteen (15) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy or (c) Licensee permanently discontinues
production and distribution of the Product; (d) Licensee fails to make any
payments to Licensor due under this Agreement. Should Licensor terminate
this Agreement pursuant to this paragraph, the parties agree that Licensee
shall have a period of sixty (60) days commencing upon the date of
termination, in which Licensee shall be permitted to sell off any existing
inventory of the Product that was manufactured prior to the date of
termination (the "Sell-Off-Period"). At the conclusion of the Sell-Off-
Period, all rights in and to the Licensed Subject Matter shall immediately,
automatically, and irrevocably revert to Licensor, and Licensee shall have no
further rights in and to the Licensed Subject Matter.
9. License Termination. Licensee may terminate this agreement upon
thirty (30) days written notice if (a) Licensor breaches a material term of
this Agreement and fails to remedy said breach within fifteen (15) days of
his receipt of written notice of the breach; (b) Licensor is convicted of a
felony involving moral turpitude. Should Licensee terminate this Agreement
pursuant to this paragraph, the parties agree that Licensee shall have a
period of sixty (60) days commencing upon the date of termination, in which
Licensee shall be permitted to sell off any existing inventory of the Product
that was manufactured prior to the date of termination (the "Sell-Off-
Period"). At the conclusion of the Sell-Off-Period, all rights in and to the
Licensed Subject Matter shall immediately, automatically, and irrevocably
revert to Licensor, and Licensee shall have no further rights in and to the
Licensed Subject Matter automatically, and irrevocably revert to Licensor,
and Licensee shall have no further rights in and to the Licensed Subject
Matter.
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and hold each other harmless from and against any and all actions,
claims, suits, losses, judgements, penalties, liabilities, damages, costs and
expenses, including, without limitation, reasonable attorney's fees and court
costs, of whatever kind and nature imposed on, incurred by, or asserted,
made, brought, or made against each other arising out of a party's breach of
any of its representations, warranties, or obligations made pursuant to this
agreement, or through the gross negligence or intentional acts of its
officers, directors, employees, or representatives. Licensee agrees to
protect, save, defend, indemnify, and hold harmless Licensor, FAME, their
assigns, heirs, and employees from and against any and all expenses, damages,
claims, suits, actions, judgements, and/or costs whatsoever, including
attorney fees, arising out of, or in any way connected with, any claim or
action arising out of this Agreement and/or the Product. The provisions of
this section shall survive any termination or expiration of this Agreement.
3
<PAGE>
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
majority of Licensee's stock or assets.
12. Notices. Any notice to be hereunder shall be made in writing and
shall be sent by certified U.S. mail, return receipt requested, postage paid.
All notices to Licensor shall be sent to Alonzo Mourning, c/o FAME 5335
Wisconsin Ave NW, Suite 850, Washington DC, 20015 (Attn: David Eyl, cc: David
A Bauman, Esq.), with a copy to: Jeffrey Wechsler, FAME, 2665 South Bayshore
Drive, Suite 1004, Coconut Grove, FL 33133. All notices to Licensee shall be
sent to Famous Fixins, Inc., 250 West 57th St., Suite 2501, New York, NY
10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to act
for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever. Licensor shall be solely responsible for the
payment of all taxes on compensation received under this Agreement.
Accordingly, Licensee shall make no deductions for tax purposes from any
compensation paid to Licensor.
14. Governing Law and Jurisdiction. Any controversy or claim arising
out of or relating to the construction of application of any terms,
provisions, or conditions of this Agreement shall on the written request of
any party hereto served on the other party, be submitted to arbitration and
such arbitration shall comply with and be governed first, in accordance with
the laws of the State of New York, and second, when not in conflict with the
laws of the State of New York, by the provisions of the American Arbitration
Association ("AAA"), as both are applicable contracts made and performed
entirely within the state of New York. Such arbitration shall be binding on
the parties.
Said location of the arbitration shall be in the office nearest to
Licensee's offices in New York City.
The cost of arbitration shall be borne by the losing party or in such
proportion as the arbitrator shall decide.
Judgement on the award rendered by the arbitrator may be entered in any
court in the world having jurisdiction,
15. No Grant of NBA Trademark Rights. Licensor in no way grants, or
purports to grant, to License any rights or uses of any names, logos,
trademarks, service marks, etc. owned by the NBA, NBA Properties, and/or any
NBA member team (including, but not limited to, the Miami Heat), including by
way of example only, any photographs of licensor in a n NBA uniform or any
reference to the NBA, NBA Properties, or any NBA member team (including, but
not limited to, the Miami Heat).
16. Confidentiality. Neither party shall disclose (or permit any
third party to disclose) the financial or other material terms of this
Agreement, with the exception only of either party's agents, attorneys,
accountants, representatives or employees, except as may be required by law.
17. Entire Agreement. This Agreement set forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this Agreement
shall be held void, voidable, invalid, or inoperative, no other provision of
this Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
4
<PAGE>
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture, distribute, promote, or sell the Product, then Licensee may,
upon notice to Licensor, terminate this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement in New
York, New York, on this day and year first above written.
LICENSEE: FAMOUS FIXINS,INC.
By: /s/ Jason Bauer
-----------------------
Jason Bauer, President
LICENSOR: /s/ Alonzo Mourning
-------------------
Alonzo Mourning
5
EXHIBIT 10.16
PROMOTIONAL LICENSE AGREEMENT
THIS AGREEMENT is made as of the 10th day of June, 1999, in New York,
New York, by and between the Major League Baseball Players Association, an
unincorporated association under the laws of the State of New York, with
offices at 12 E. 49th Street, New York, New York 10017 (hereinafter "MLBPA")
and Famous Fixins, Inc, a New York corporation, (hereinafter "Licensee") with
offices located at 250 W. 57th St. Suite 2501 New York, NY 10107.
WHEREAS, MLBPA is acting on behalf of all of the active baseball
players of the National League and the American League who have entered into
a Commercial Authorization Agreement with the MLBPA (hereinafter "players");
and who, upon being polled by the MLBPA, have not indicated they have granted
a license for products which would conflict with the license granted herein;
and
WHEREAS, MLBPA in such capacity has the right to negotiate this
Agreement and to grant rights in and to the logo, name and symbol of MLBPA
identified in Schedule A hereto (the "Trademarks") and the names, nicknames,
likenesses, signatures, pictures, playing records, and/or biographical data
of each player described in Schedule A hereto as part of a group (hereinafter
"the Rights"); and
WHEREAS, Licensee desires to use the Rights and/or the Trademarks
solely in connection with a promotion as described in Schedule-- B ("the
Promotion") in the territory identified in Schedule B (the "Licensed
Territory") and for the period identified in Schedule B (the "License
Period").
WHEREAS, MLBPA is willing to grant Licensee such right to use the
Rights and/or the Trademarks in connection with the Promotion in accordance
with the terms and conditions recited herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions herein contained, it is hereby agreed as follows:
1. GRANT.
(a) MLBPA hereby grants to Licensee and Licensee hereby
accepts the non-exclusive, non-transferable, nonassignable license, without
the right to grant sublicenses, to use the Rights and Trademarks solely in
connection with the Promotion as described in Schedule B. Licensee shall not
knowingly utilize the Trademarks or the Rights, or permit others to use them,
outside of the Licensed Territory or for any other purpose.
(b) MLBPA represents and warrants that it has the authority
to grant the rights licensed herein. MLBPA makes no representation that it
has the authority to grant, nor does it grant herein, the right to utilize
team symbols, insignias or logos, or the name, symbol, or logo of any other
licensee of MLBPA, or reproductions of any products produced by or for any
other licensee of MLBPA. Accordingly, it is understood by the parties hereto
that if any of the foregoing are to be utilized in connection with the
exercise of the license granted hereunder, including without limitation the
likenesses of players utilizing team logos, symbols or insignias, it will be
the responsibility of Licensee to obtain all necessary permissions for the
use of such material.
(c) Unless specifically authorized in advance by MLBPA in
writing, Licensee agrees to utilize the names and/or likenesses of a minimum
of eight (8) players in connection with the Promotion and Licensee agrees
that the names and/or likenesses of all such players will be used with equal
prominence.
(d) The license granted by MLBPA to Licensee herein does not
include the right to, and Licensee shall not in any manner use (or purport to
grant others the right to use) the Rights as a testimonial or endorsement of
any product or service by all or any of the players, or by the MLBPA. Nor
does this license convey the right to feature or highlight any individual
player apart from the group. In the event Licensee is interested in
highlighting any player or in securing the personal endorsement or services
of any player, Licensee understands and agrees that such will require the
personal approval of the individual player involved and a separate payment to
such player, through the MLBPA, independent of and in addition to all payments
due to the MLBPA pursuant to this Agreement
(e) The rights granted by MLBPA to Licensee hereunder do not
include the right to, and Licensee shall not in any manner, use (or purport
to grant others the right to use) the Trademarks or the Rights for the
purpose, in whole or in part, of promoting the purchase of any service or
product other than as specifically set forth herein in connection with the
Promotion.
(f) All rights not expressly granted to Licensee in this
Agreement are specifically reserved to MLBPA.
2. TERM.
This Agreement shall be effective and shall continue for the
License Period set forth on Schedule B, unless sooner terminated pursuant to
a provision of this Agreement.
3. ROYALTIES AND STATEMENTS.
(a) For the license granted herein, immediately upon
execution of this Agreement, Licensee agrees to pay MLBPA a non-refundable
fee in the amount and in the manner set forth on Schedule B ("the Promotional
Rights Fee").
(b) In addition to the Promotional Rights Fee, Licensee
agrees to pay to MLBPA on each of the dates set forth on Schedule B, a
royalty for any premium item and/or product employing the rights and/or the
trademarks in connection with the Promotion as set forth on Schedule B.
(c) Notwithstanding the foregoing subsection (b), if
Licensee obtains the premium item and/or product described above from a
manufacturer licensed by MLBPA ("MLBPA licensee"), Licensee will not be
obligated to pay MLBPA the royalties described therein, provided that
Licensee obtains from such MLBPA licensee and provides to MLBPA a written
agreement stating that such MLBPA licensee will pay to MLBPA the royalties
described above in accordance with the terms of this Agreement
(d) On each of the dates set forth on Schedule B, Licensee
shall provide MLBPA with a full and complete statement (in a form
satisfactory to MLBPA) with respect to any and all premium items and/or
products utilized in connection with the Promotion, said statements) to be
certified as accurately an officer of Licensee and to include any other
information which MLBPA may reasonably request.
(e) All amounts payable to MLBPA by Licensee, together with
a complete and accurate statement setting forth the basis for calculation of
such amounts in a form acceptable to MLBPA, shall be submitted to: Major
League Baseball Players Association 12 E. 49th Street New York, NY 10017 All
payments made hereunder shall be in United States dollars drawn on a United
States bank, unless otherwise specifically agreed upon by the parties.
(g) Time is of the essence with respect to all payments to
be made hereunder by Licensee. Interest at a rate of the lesser of the
maximum rate allowed by law or one and one-half percent (1-1/2%) per month,
compounded daily, shall accrue on any amount due MLBPA hereunder from and
after the date upon which the payment is due until the date of receipt of
payment.
(h) The receipt and/or acceptance by MLBPA of any of the
royalties paid hereunder to MLBPA (or the cashing of any royalty checks paid
hereunder) shall not preclude MLBPA from questioning the correctness thereof
at any time and, in the event that any inconsistencies or mistakes are
discovered in such statements or payments, they shall immediately be
rectified by Licensee and the appropriate payment shall be made by Licensee.
4. AUDIT.
(a) Licensee agrees to keep accurate books of account and
records as its principal place of business covering all transactions relating
to the license granted herein. MLBPA and its duly authorized representatives
shall have the right, upon reasonable notice, at all reasonable hours of the
day, to audit Licensee's books of account and records and all other documents
and material in the possession or under the control of Licensee with respect
to the subject matter and the terms of this Agreement and to make copies and
extracts thereof. In the event that any such audit reveals an underpayment
by Licensee, Licensee shall immediately upon demand remit payment to MLBPA in
the amount of such underpayment plus interest calculated at the rate of the
lessor of one and one-half percent (1-1/2%) per month or the maximum rate
allowed by law, compounded daily, calculated from the date such payment(s)
were actually due until the date such payment is actually made. In the event
that any such underpayment is greater than Five Thousand Dollars ($5,000) or
two percent (2%) of the royalties due for the period audited, whichever is
less, Licensee shall reimburse MLBPA for the costs and expenses of such
audit.
(b) All books of account and records of Licensee covering
all transactions relating to the license granted herein shall be retained by
Licensee for at least two (2) years after the expiration or termination of
this Agreement for possible inspection by MLBPA.
5. QUALITY, NOTICES, APPROVALS, AND SAMPLES.
(a) All premium items, products, packages, cartons, point-
of-purchase, promotional and advertising materials, if any, associated with
the Promotion as described on Schedule B ("Promotional Material") shall be of
high quality so as to be suited to the favorable advantage, protection and
enhancement of the Trademarks and the Rights, and shall be manufactured, sold
and/or distributed in full conformance with all applicable laws and
regulations.
(b) Before commencing or authorizing third parties to
commence the design or development of any Promotional Material, Licensee
shall submit at its own cost to MLBPA, for approval, (1) complete layouts and
descriptions of the proposed Promotional Material including full information
on the nature and function of such Promotional Material and a general
description of how the Rights and/or Trademarks and other material will be
used thereon; (2) pre-production artwork and proofs; and (3) actual proofs or
final pre-production samples thereof. Licensee may not manufacture, use,
advertise, promote, ship and/or distribute any Promotional Material until it
has submitted such Promotional Material to MLBPA for approval and received
written approval of same from MLBPA at each stage of development in the
manner provided herein. Such approval shall not be unreasonably withheld.
Should MLBPA fail to approve in writing any of the submissions furnished it
by Licensee within seven (7) days from the date of submission thereof, such
failure shall be considered to be a disapproval thereof. Licensee shall send
all submissions, notices, and requests for approval to:
1. Tina Morris
Major League Baseball Players Association
12 E. 49th Street, 24th Floor
New York, New York 1001 7
and
2. Richard White
MLB Players Choice Promotions
120 West 12th Street, Suite 1600
Kansas City, Missouri 64105
(c) Upon commencement of distribution of the Promotional
Material after all required approvals have been given by MLBPA Licensee shall
submit, at its own cost, to MLBPA and to MSA, an additional two (2) copies of
the final approved Promotional Material.
(d) After the required approval of Promotional Material has
been secured from MLBPA pursuant to Section 5(b) above, Licensee shall not
depart from the specifications, quality or appearance thereof in any material
respect without fist obtaining the express written approval of MLBPA.
6. OWNERSHIP OF RIGHTS.
(a) It is understood and agreed that MLBPA is the sole and
exclusive holder of all right, title and interest in and to the Rights;
and/or the Trademarks for the duration of this Agreement.
(b) Nothing contained in this Agreement shall be construed
as an assignment to Licensee of any right, title and/or interest in or to the
Rights and/or the trademarks, it being understood that all right, title and
interest relating thereto are expressly reserved by MLBPA except for the
rights being licensed hereunder.
(c) No license is being granted hereunder for any purpose or
as to any products, services or material other than in connection with the
Promotion as authorized herein and only in the Licensed Territory. MLBPA
reserves for such use as it may determine all rights of any kind other than
the rights herein licensed to Licensee.
(d) Licensee shall not use the Rights and/or the Trademarks
other than as permitted herein and, in particular, shall not incorporate the
Rights and/or the Trademarks in Licensee's corporate or business name in any
manner whatsoever. Licensee agrees that in using the Rights and Trademarks,
it will in no way represent that it has any rights, title and/or interest in
and/or to the Rights and/or the Trademarks other than those expressly granted
under the terms of this Agreement. Licensee further agrees that it will not
use and/or authorize the use, either during or after the term of this
Agreement, of any configuration, trademark, trade name or other designation
confusingly similar to the Rights and/or any of the Trademarks.
(e) Notwithstanding any rights otherwise granted to
Licensee by state or federal trademark or copyright laws or otherwise,
Licensee shall not without express written permission of MLBPA directly or
indirectly use, or authorize others to use, in any manner whatsoever, any
artwork or designs or other material involving the Rights and/or Trademarks,
or any reproductions thereof following the expiration or termination of this
Agreement, notwithstanding their invention or use by Licensee, and Licensee
shall destroy all such artwork and/or designs and/or other material and
furnish to MLBPA satisfactory evidence of their destruction.
7. GOODWILL AND PROMOTIONAL VALUE.
(a) Licensee recognizes the value of the goodwill associated
with the Rights and/or the Trademarks and acknowledges that the Rights and/or
the Trademarks, and all rights therein and the goodwill pertaining thereto,
belong exclusively to MLBPA. Licensee further recognizes and acknowledges
that the Rights and/or the Trademarks have acquired secondary meaning in the
mind of the public. Licensee agrees that during the term of this Agreement,
or thereafter, it will not attack the title or any rights of MLBPA in and to
the Rights and/or the Trademarks or the validity of the license granted
herein.
(b) Licensee agrees that its use of the Rights and/or the
Trademarks shall inure to the benefit of MLBPA and that Licensee shall not,
at any time, acquire any rights in the Rights and/or the Trademarks by virtue
of any use it may make of the Rights and/or of the Trademarks. Licensee
hereby assigns to MLBPA any and all trademarks and trademark rights in the
Trademarks and/or Rights created by such use, together with the good will of
the business in connection with which such Trademarks are used.
(c) Licensee acknowledges that MLBPA is entering into this
Agreement not only in consideration of the sums to be paid here under but
also in recognition of the intrinsic benefit to proper maintenance of the
image and reputation of MLBPA and the places as a result of the conduct of
the Promotion in accordance with the provisions of this Agreement. Licensee
therefore acknowledges that its failure to conduct the Promotion in
accordance with the provisions of this Agreement, including without
limitation its obligations to protect and enhance the value of Rights and
Trademarks, will result in immediate and irreparable damage to MLBPA in
connection with promotion of the Rights and/or the Trademarks and/or to its
members and that there will be no adequate remedy at law for the failure by
Licensee to abide by such provisions of this Agreement. Accordingly,
Licensee agrees that in the event of any breach by Licensee, in addition to
all other remedies available to it hereunder, MLBPA may at its sole option
commence an action in any court having jurisdiction or an arbitration
proceeding, and shall be entitled to injunctive relief against any such
breach as well as such other relief as any arbitrators) or court with
jurisdiction may deem just and proper.
8. TRADEMARK AND COPYRIGHT PROTECTION.
(a) The license granted herein is conditioned upon
Licensee's full and complete compliance with the provisions of the trademark
and copyright laws of the United States and any foreign country or countries
in the Licensed Territory.
(b) Licensee agrees to permanently affix to all Promotional
Material the MLBPA logo and appropriate legends, markings and/or notices as
required by MLBPA, to give appropriate notice to the consuming public of
MLBPA's right, title and interest therein. Licensee agrees that, unless
otherwise specified in writing by MLBPA, each usage of the Trademarks shall
be followed by either the TM or the a Trademark Notice symbol, as
appropriate, and the following legends shall appear at least once on each
piece of Promotional Material:
Copyright (C) MLBPA (year-date)
Licensee also shall include on the Promotion Material the following notice:
Official Licensee --
Major League Baseball Players Association.
(c) Licensee agrees that it will not use or distribute any
Promotional Material which does not carry notices meeting the requirements of
this Agreement.
(d) Licensee shall use no other markings, legends and/or
notices on or in association with the Promotional Material other than those
specified above and on Schedule B hereto and such other markings, legends
and/or notices as may be specified by MLBPA, without first obtaining MLBPA's
express written approval.
(e) Licensee agrees that it shall not at any time within the
Licensed Territory or anywhere else in the world apply for any copyright or
trademark protection which would affect MLBPA's ownership of any rights in
the Rights and/or the Trademarks nor file any document with any governmental
authority or assert directly or indirectly any right or take any other action
which could affect MLBPA's ownership of the Rights and/or the Trademarks or
the publicity rights of the players or knowingly aid or abet anyone else in
doing so.
(f) Licensee agrees to cooperate in all reasonable respects
with MLBPA in protecting and defending the Rights and/or the Trademarks. In
the event that Licensee becomes aware of any claim or problem arising with
respect to the protection of the Right and/or the Trademarks in the Licensed
Territory, Licensee shall promptly advise MLBPA in writing of the nature and
extent of same. MLBPA has no obligation to take any action whatsoever in the
event that any claim or problem arises with respect to the protection of the
Rights and/or the Trademarks.
9. INFRINGEMENTS.
(a) Licensee agrees to cooperate with MLBPA in the
enforcement of MLBPA's rights in the Rights and/or the Trademarks. Licensee
agrees to notify MLBPA in writing of any infringements or imitations by third
parties of the Rights, the Trademarks, and/or the Promotional Material which
may come to Licensee's attention. MLBPA shall have sole right to determine
whether or not any action shall be taken on account of any such infringement
or imitation. MLBPA, if it so desires, may commence or prosecute any claims
or suits in its own name or in the name of Licensee or join Licensee as a
party thereto, provided that nothing in this paragraph shall require Licensee
to incur more than nominal out of-pocket expenses. Licensee agrees not to
contact any third party, not to make any demands or claims, not to institute
any suit nor take any other action on account of such infringements or
limitations without obtaining the prior express written permission of MLBPA.
(b) With respect to all claims and suits involving the
Rights and/or the Trademarks, including suits in which licensee is joined as
a party, MLBPA shall have the sole right to employ counsel of its choosing
and to direct the handling of the litigation and any settlement thereof.
MLBPA shall be entitled to receive and retain all amounts awarded as damages,
profits or otherwise in connection with such suits.
10. INDEMNIFICATION.
Licensee hereby agrees to defend, indemnify and hold harmless
MLBPA, its members, offices, directors, employees and agents from and against
any and all claims, demands, causes of action and judgments ("Claims")
arising out of or in connection with
(a) Licensee's conduct of the Promotion, and/or use of the
Promotional Material, including but not limited to any allegedly unauthorized
use by Licensee of any trademark, copyright, patent, process, idea, method,
device, logo, symbol, insignia, name, term or material other than those
licensed herein;
(b) Licensee's use of any logos, symbols, names, terms or
other material claimed to be the property of any Major League Baseball
club(s) or any other entity affiliated directly or indirectly with any Major
League Baseball club(s), and
(c) Any alleged defects in any product utilized in
connection with the Promotion. With respect to the foregoing indemnity,
Licensee agrees to defend and hold MLBPA and its members harmless at no cost
or expense to the MLBPA whatsoever including, but not limited to, attorneys'
fees and court costs. Under no circumstances shall Licensee have the right
to settle or otherwise compromise any Claim without the prior written consent
of MLBPA. MLBPA and its members shall have the right to defend themselves in
any such action or proceeding with attorneys of MLBPA's selection.
11. INSURANCE.
Licensee shall, throughout the License Period of this Agreement,
obtain and maintain at its own cost and expense from a qualified insurance
company acceptable to MLBPA, or self-insurance as authorized by law,
comprehensive general liability insurance, the form of which must be
acceptable to MLBPA, naming MLBPA and its members as an additional insured.
Such policy shall provide protection against any and all claims, demands and
causes of action arising out of: (a) any defect or failure to perform,
alleged or otherwise, in connection with the Promotion or Promotional
Material; (b) any material used in connection with the Promotion or
Promotional Material; or (c) any advertising of the Promotion or Promotional
Material. The amount of coverage shall be a minimum of Two Million Dollars
($2,000,000) for each single occurrence. The policy shall provide for twenty
(20) days notice to MLBPA from the insurer in the event of any modification,
cancellation or termination. Licensee agrees to furnish MLBPA a certificate
of insurance evidencing same and a copy of any relevant additional insured
endorsement or satisfactory evidence of self-insurance prior to commencement
of the Promotion, and in no event shall Licensee manufacture, advertise,
promote, ship and/or distribute any Promotional Material prior to receipt by
MLBPA of such evidence of insurance and additional insured endorsement.
12. EXPLOITATION BY LICENSEE.
Licensee agrees to vigorously exploit, advertise and promote the
Promotion to the favorable advantage and enhancement of the Trademarks and
the Rights in accordance with the terms of this Agreement and specifically in
the manner described in Schedule B. In the event of Licensee's failure to
comply with this requirement, in addition to all other remedies available to
it, MLBPA shall have the option to terminate this Agreement upon mailing
notice of such termination to Licensee.
13. ASSIGNABILITY AND SUBLICENSING.
The license granted hereunder is and shall be personal to
Licensee and shall not be assigned by any act of Licensee or by operation of
law or otherwise encumbered. Licensee shall not have any Promotional
Material produced for Licensee by a third party unless Licensee first obtains
the express written approval of MLBPA and, if such manufacturer is not an
authorized licensee of MLBPA, such manufacturer shall have signed an
agreement in the form attached hereto as Schedule C. Licensee shall have no
right to grant any sublicenses without MLBPA's prior express written
approval. Any attempt on the part of Licensee to arrange for manufacture by
a third party except as provided herein, or to sublicense, assign, encumber
or alter its rights under this Agreement by operation of law or otherwise
shall result in the automatic termination of this Agreement, and all rights
granted herein shall immediately revert to MLBPA.
14. TERMINATION.
(a) MLBPA's Right of Termination.
(i) Immediate Right of Termination. In addition to
the automatic termination provisions and/or termination rights provided
elsewhere in this Agreement, and notwithstanding any attempts by Licensee to
cure such defaults, MLBPA shall have the right immediately to terminate this
Agreement by giving written notice to Licensee if Licensee does any of the
following:
a. Manufactures, advertises, promotes, ships,
distributes and/or uses in any way any Promotional Material without having
the prior written approval of MLBPA as provided for in this Agreement;
b. Continues to manufacture, advertise, promote,
ship, distribute and/or use in any way any Promotional Material after receipt
of notice from MLBPA disapproving same;
c. Fails to carry on the Promotional Material
the notices specified by MLBPA, as required herein;
d. Becomes subject to any voluntary or
involuntary order of any governmental agency involving the recall of any of
the Promotional Material because of safety, health or other hazards or risks
to the public;
e. Directly or indirectly through its
controlling shareholders or any of its officers, directors or employees,
takes any action in connection with the manufacture, advertising, promotion,
shipment and/or distribution of the Promotional Material which damages or
reflects adversely upon MLBPA, the Rights and/or the Trademarks;
f. Breaches any of the provisions of this
Agreement relating to the unauthorized assertion of right in the Rights
and/or the Trademarks;
g. Fails to obtain or maintain insurance as
required by the provisions of this Agreement.
h. Utilizes the Rights and/or the Trademarks in
any manner or in connection with any product other than as specifically
authorized in this Agreement.
(ii) Curable Breaches by Licensee. If Licensee
a. Commits a material breach of any other terms
of this Agreement, or
b. Files a petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or makes an assignment for the benefit
of creditors, or an arrangement pursuant to any bankruptcy law, or
discontinues its business, or if a receiver is appointed for it or its
business and is not discharged within thirty (30) days, and fails to cure
such default and furnish reasonable proof of its cure to MLBPA within fifteen
(15) days after receiving written notice of breach, MLBPA shall have the
right to terminate this Agreement by giving written notice to Licensee.
(b) Licensee's Right of Termination. If MLBPA commits a
material breach of any of the terms of this Agreement, and fails to cure such
default and furnish reasonable proof of its cure to Licensee within fifteen
(15) days after receiving written notice of breach, Licensee shall have the
right to terminate this Agreement by giving written notice to MLBPA.
15. POST-TERMINATION AND EXPIRATION RIGHTS AND OBLIGATIONS.
(a) Upon termination of this Agreement, Licensee and its
receivers, representatives, trustees, agents, administrators, successors
and/or permitted assigns shall have no right to use in any way the Rights,
the Trademarks, or any Promotional Material.
(b) Upon expiration of this Agreement or termination by
MLBPA, notwithstanding anything to the contrary herein, any and all sums due
to MLBPA shall become immediately due and payable.
(c) After the expiration or termination of this Agreement,
all rights granted to Licensee shall forthwith revert to MLBPA, and Licensee
shall refrain from further use of the Rights and/or the Trademarks or any
further reference to them, either directly or indirectly, in connection with
the manufacture, advertising, promotion, shipment and/or distribution of
Promotional Material or otherwise. Licensee shall further destroy all
artwork, films, transparencies, separations, printing plates, molds and other
materials which reproduce the Trademarks and/or the Rights and shall give
MLBPA satisfactory evidence of their destruction. Licensee shall be
responsible to MLBPA for any damages caused by the unauthorized use by
Licensee or by others of such reproduction materials which are not destroyed.
(d) Licensee acknowledges that its failure to cease use of
the Promotional Material at the termination or expiration of this Agreement
will result in immediate and irreparable damage to MLBPA and/or to the
players and to the rights of any subsequent licensee of the MLBPA. Licensee
acknowledges and admits that there is no adequate remedy at law for failure
to cease such activities and Licensee agrees that in the event of such
failure, in addition to all other remedies available to it hereunder, MLBPA
at its sole option may commence an action in any court having jurisdiction or
an arbitration proceeding, and shall be entitled to equitable relief by way
of injunctive relief and such other relief as any arbitrators or court with
jurisdiction may deem just and proper.
16. FINAL STATEMENT UPON TERMINATION OR EXPIRATION.
Within fifteen (15) days after termination or expiration of this
Agreement, as the case may be, Licensee shall deliver to MLBPA a statement
indicating the number and description of the Promotional Material which it
had on hand as of the expiration or termination date. MLBPA shall have the
option upon prior written notice to Licensee of conducting a physical
inventory at the time of expiration or termination and/or at a later date in
order to ascertain or verify such statement. Licensee shall immediately
destroy such inventory and furnish MLBPA with satisfactory evidence of its
destruction. In the event that Licensee refuses to permit MLBPA to conduct
such physical inventory, MLBPA shall have recourse to all other remedies
available to it.
17. NOTICES.
All notices or other communications required or desired to be
sent to either party shall be in writing and sent by Registered or Certified
Mail, postage prepaid, return receipt requested, or by facsimile or telegram,
charges prepaid. Such notices, including facsimile or telegram, shall be
effective on the date sent, provided that any notice sent by facsimile also
shall be sent by regular mail. The addresses for MLBPA and Licensee shall be
as set forth on Schedule B. Either party may change its address by notice in
writing to the other party.
18. RELATIONSHIP OF THE PARTIES.
This Agreement does not create a partnership or joint venture
between the parties and neither party shall have any power to obligate or
bind the other in any manner whatsoever.
19. APPLICABLE LAW AND DISPUTES.
This Agreement is made within the State of New York and shall be
construed in accordance with the laws of the United States and the State of
New York. Licensee hereby expressly waives any right to the benefits of
remedial legislation, if any, of Licensee's home state.
20. REMEDIES.
(a) Except as otherwise provided herein, any dispute or
disagreement between the parties hereto arising out of or relating to this
Agreement shall be settled by final and binding arbitration, in New York
City, under the rules then obtaining of the American Arbitration Association.
The parties hereto expressly stipulate that the arbitrators) shall have full
subpoena power and full powers to fashion appropriate remedies, including
without limitation the power to grant equitable and/or injunctive and/or
declaratory relief. Judgment upon the award may be entered in any court
having jurisdiction.
(b) Licensee recognizes the unique nature of the Rights and
the Trademarks, and the possibility that breaches of this Agreement by
Licensee may require preliminary or extraordinary relief beyond that
available in arbitration, and the possibility that breaches of this Agreement
may involve third parties or witnesses or issues which are beyond the
practical jurisdiction of arbitrators. Accordingly, notwithstanding the
provisions of paragraph 20(a), MLBPA (but not Licensee) may, at its sole and
exclusive option, elect as an alternative to arbitration to commence an
action or proceeding in any court of competent jurisdiction to enforce this
Agreement or protect the Rights and the Trademarks. MLBPA may also require
the termination of a previously commenced arbitration proceeding so as to
permit a dispute between the parties to be resolved in an action or
proceeding in a court of competent jurisdiction, so long as MLBPA has
theretofore not waived its right to do so by taking substantial steps to
prosecute or defend the arbitration proceeding.
21. CAPTIONS.
The captions used in connection with the paragraphs and
subparagraphs of this Agreement are inserted only for purpose of reference.
Such captions shall not be deemed to govern, limit, modify or in any other
manner affect the scope, meaning or intent of the provisions of this
Agreement or any part thereof nor shall such captions otherwise be given any
legal effect
22. WAIVER.
(a) No waiver by either party of a breach or a default
hereunder shall be deemed a waiver by such party of a subsequent breach or
default of a like or similar nature.
(b) Resort by either party to any remedies referred to in
this Agreement or arising by reason of a breach of this Agreement by the
other party shall not be construed as a waiver by such party of its right to
resort to any and all other legal and equitable remedies available to it.
23. SURVIVAL OF THE RIGHTS.
Any rights and obligations created by this Agreement and which by
necessary implication continue after its expiration or termination shall
survive such expiration or termination.
24. SEVERABILITY.
In the event that any term or provision of this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision and this Agreement shall be interpreted and construed
as if such term or provision, to the extent the same shall have been held to
be invalid, illegal or unenforceable, had never been contained herein.
25. INTEGRATION.
This Agreement represents the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
previous representations, understandings or agreements, oral or written,
between the parties with respect to the subject matter hereof. This
Agreement cannot be modified except by a written instrument signed by the
parties hereto.
By their execution below, the parties hereto have agreed to all
of the terms and conditions of this Agreement.
MAJOR LEAGUE BASEBALL /s/ Jason Bauer
PLAYERS ASSOCIATION ---------------------------
By: /s/ Donald Fehr By: Jason Bauer
--------------------- ------------------------
Date: 9.15.99 Date: 9/14/99
------------------- ----------------------
<PAGE>
SCHEDULE A
TRADEMARKS
MLBPA
Major League Baseball Players Association
MLB Players Choice Logo
THE RIGHTS
The names, nicknames, likenesses, signatures, pictures, numbers,
playing records, and/or biographical data of those active baseball players in
the National League and the American League who have entered into a
Commercial Authorization Agreement with the MLBPA. Licensee shall be
required to submit list(s) of players Licensee desires to use for approval by
the MLBPA. Licensee shall not utilize any players until the MLBPA has
approved, in writing, the player list(s) submitted by Licensee.
<PAGE>
SCHEDULE B
DESCRIPTION OF PROMOTION
Licensee shall utilize the granted rights for use in connection with
the sale of its cereal products. Licensee is required to utilize at least
eight players, in equal prominence, on each package, advertisement, and
signing. If Licensee chooses to utilize less than eight players on a box,
highlight agreements with each player must be completed, and one (1) copy
provided to the MLBPA, prior to final approval by the MLBPA.
LICENSE PERIOD
June 1, 1999 to April 14, 2000.
LICENSED TERRITORY
United States, its possessions and territories, Canada, and the Caribbean
PROMOTIONAL RIGHTS FEE
$125,000, payable as follows:
$5,000 upon execution of this agreement, $20,000 on or before
October 15th, 1999, and $100,000 on or before April 14th, 2000.
ROYALTY AND STATEMENTS
Licensee will pay a 13.5% royalty on the total cost of all trading cards, and
10% on the total cost of all other premium items utilizing the granted
rights. Royalties shall be payable as follows: For product distributed prior
to November 15th, 1999, royalties shall be due on or before December 15th,
1999. For product distributed after November 15th, 1999, royalties shall be
due on or before April 30, 2000.
ADDITIONAL CONSIDERATIONS
Licensee will distribute, at a minimum, cereal boxes that highlight the
following players during the term of the agreement: Cal Ripken, Jr., Sammy
Sosa, Alex Rodriguez, Barry Bonds, Ken Caminetti, Jeff Bagwell, Craig Biggio.
Licensee shall include the Players Choice logo and the c MLBPA, on all boxes,
in a manner that is approved by MLBPA in advance and in writing, with the
exception of boxes that have been produced prior to the date of this
agreement for "Cal's Classic O's" cereal. Licensee must submit all
materials, including but not limited to, boxes, in-pack or mail-in premiums,
selling materials, press releases, point-of-purchase materials to MLBPA for
approval prior to production.
ADDRESSES FOR NOTICES
Major League Baseball Players Association
12 East 49th Street
New York, New York 100 1 7
Attn: Judy Heeter
Famous Fixins, Inc.
250 West 57th St.
Suite 2501
NewYork, NY 10107
Attn: Jason Bauer
Acknowledged and Approved:
MAJOR LEAGUE BASEBALL /s/ Jason Bauer
PLAYERS ASSOCIATION ------------------------------
Famous Fixins, Inc. (LICENSEE)
By: /s/ Donald Fehr By: Jason Bauer
--------------------- ---------------------------
Date: 9.15.99 Date: 9/14/99
------------------- -------------------------
<PAGE>
SCHEDULE C
MANUFACTURER'S AGREEMENT
Licensee: Famous Fixins, Inc.
Licensed Territory: United States, its possessions and territories, Canada,
and the Caribbean
Promotional Materials:
The undersigned understands that the Major League Baseball Players
Association ("MLBPA") has licensed the above named Licensee to produce the
above-named materials ("Promotional Materials") utilizing certain names,
logos, symbols, likenesses, signatures and pictures which are the property of
MLBPA ("the Rights"). In order to induce MLBPA to consent to the manufacture
of the Promotional Materials by the undersigned, the undersigned agrees that
it will not manufacture the Promotional Materials for anyone but the
Licensee; that it will not sell the Promotional Materials to anyone but the
Licensee; that it will not knowingly manufacture/he Promotional Materials for
distribution in any territory other than the above-named Licensed Territory;
that it will not (unless MLBPA otherwise consents in advance in writing)
manufacture any other merchandise utilizing any aspect of the Rights; that it
will permit such representatives as MLBPA may from time to time designate to
inspect the activities of the undersigned with relation to its manufacture of
the Promotional Materials and that whenever the Licensee ceases to require
the undersigned to manufacture the Promotional Materials, the undersigned
will return to the Licensee or to MLBPA any molds, plates, engravings, or
other devices used to reproduce any of the Rights and/or the Trademarks or at
the direction of MLBPA or Licensee will give satisfactory evidence of the
destruction thereof MLBPA shall be entitled to invoke any remedy permitted by
law for violation of this agreement by the undersigned.
Famous Fixins, Inc.
By:_______________________
Title:____________________
<PAGE>
SCHEDULE D
Royalty Report for: Major League Baseball Players Association
12 East 49th Street
New York, NY 10017
Licensee:________________ Date:
________________ Period Covered:______________
________________
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SKU ITEM WHOLESALE QUANTITY GROSS SELLING RETURNS RETURNS NET ROYALTY ROYALTY
NUMBER DESCRIPTION PLAYER(S) PRICE/UNIT SHIPPED PRICE (UNITS) (DOLLARS) SALES RATE DUE
</TABLE>
We had no sales for the period TOTALLY ROYALTIES DUE: ________
but our product is scheduled LESS GUARANTEED
to start shipping:___________ ROYALTIES PAID TO DATE: ________
[Date]
AMOUNT DUE: _____________________
THIS ROYALTY REPORT WAS CERTIFIED BY:____________________
[Signature]
____________________
[Title]
EXHIBIT 10.17
Contract No. ML-3858
MAJOR LEAGIUE BASEBALL PROPERTIES, INC.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT by and between Major League Baseball Properties,
Inc., 245 Park Avenue, New York, NY 10167 (hereinafter referred to as
"Licensor"), as agent for the Major League Baseball Clubs (the "Clubs"), and
Famous Fixins, Inc., 250 West 57th Street, New York, NY 10107 (hereinafter
referred to as "Licensee"). This Agreement is not effective until signed by
the parties hereto.
THIS WILL CONFIRM OUR AGREEMENT AS FOLLOWS:
1. GRANT OF LICENSE: Licensor grants to Licensee for the term of
this Agreement, subject to the terms and conditions hereinafter contained,
the non-exclusive license to utilize the names, character, symbols, designs,
likenesses and visual representations described in Schedule A attached hereto
(herein such names, characters, symbols,' designs, likenesses and visual
representations are collectively called "Logos"), to be used solely in
connection with the manufacture, distribution, promotion, advertisement and
sale of the article or articles specified in Schedule B attached hereto
(herein such article or articles are called "Licensed Product(s)"). This
license does not constitute and may not be used so as to imply the
endorsement of the Licensed Product(s) or any other product of Licensee by
Licensor, the Office of the Commissioner of Baseball, the American or
National Leagues of Professional Baseball Clubs (hereinafter referred to as
the "Leagues") or the Clubs. While the Logos licensed herein may be used as
trademarks subject to the terms of this License Agreement, the Logos are not
licensed herein for use as certification marks or indications of a particular
standard of quality. Any exclusivity granted hereunder shall be subject to
presently outstanding agreements granted by the Clubs. Further, any
exclusivity granted hereunder shall pertain only to the extent of the items
described and, if given, at the price set forth in Schedule E. Licensor
warrants and represents that as the agent for the Clubs, pursuant to
authority granted by the Clubs, it has the full authority to license the
Logos in connection with the manufacture, distribution, promotion,
advertisement and sale of the Licensed Product(s).
2. TERRITORY: Licensee shall be entitled to use the license
granted hereunder only in the territory described in Schedule C attached
hereto (herein such territory is called "Licensed Territory"). Licensee will
not make use of or authorize any use of this license or the Licensed
Product(s) outside the Licensed Territory or distribute or sell the Licensed
Product(s) directly or through others to retailers outside the Licensed
Territory.
3. LICENSE PERIOD: The license granted hereunder shall be
effective and terminate as of the dates specified in Schedule D attached
hereto, unless sooner terminated or renewed in accordance with the terms and
conditions hereof.
4. PAYMENT: A. Advance and Guaranteed Compensation: Licensee
agrees to pay Licensor the sums specified in Schedule E attached hereto, as
advance minimum compensation (herein called "Advance Compensation") and as
guaranteed minimum compensation (herein called "Guaranteed Compensation").
The Advance Compensation shall be paid as set forth in Schedule E, and shall
apply against Percentage Compensation as defined below. The Guaranteed
Compensation shall be paid as provided in Schedule E except to the extent
that paid Advance Compensation and annual cumulative payments of Percentage
Compensation shall theretofore have offset all or a portion of the total of
such Guaranteed Compensation. Notwithstanding the foregoing, no part of
Percentage Compensation which may be attributable to premium sales (as
defined hereunder) of the Licensed Product(s) shall serve to offset any part
of the Total Guaranteed Compensation specified in Schedule E. No part of such
Advance Compensation and no part of such Guaranteed Compensation shall be
repayable to Licensee in any event, except as is expressly provided for
herein.
B. Percentage Compensation: Licensee agrees to pay Licensor
a sum equal to the percentage specified in Schedule E (or Licensor's
prevailing rate, if greater) of all net sales (as defined below) by Licensee
or any of its affiliated, associated or subsidiary entities of the Licensed
Product(s) covered by this Agreement. (Such percentage of net sales is herein
called "Percentage Compensation.") Percentage Compensation shall be payable
concurrently with the periodic statements required in the following
paragraph, except to the extent offset by Guaranteed Compensation theretofore
remitted. The term "net sales" shall mean gross sales based on the wholesale
price to the retail trade less quantity discounts and actual returns, but no
deduction shall be made for uncollectible accounts, commissions, taxes,
discounts other than quantity discounts, such as cash discounts and discounts
attributable to the issuance of a letter of credit, or any other amount. No
costs incurred in the manufacture, sale, distribution, promotion or
advertisement of the Licensed Product(s) shall be deducted in any Percentage
Compensation payable by Licensee. Said Percentage Compensation shall also be
paid by Licensee to Licensor on all Licensed Product(s) (including, without
limitation, any irregulars, seconds, etc. distributed pursuant to the
provisions of Paragraph 10 of this Agreement) distributed by Licensee or any
of its affiliated, associated or subsidiary entities even if not billed or
billed at less than usual net sales price for such Licensed Product(s), and
shall be based upon the usual net sales price for such Licensed Product(s)
sold to the trade by Licensee. Any late payments of Advance Compensation,
Guaranteed Compensation or Percentage Compensation shall require Licensee to
pay Licensor, in addition to the amounts due, interest at one percent (1%)
per month or the highest prime lending rate of Chase Manhattan Bank during
the period such amounts are delinquent, whichever is greater, on the amounts
delinquent for the period of the delinquency, without prejudice to any other
rights of Licensor in connection therewith.
C. Catalog Contribution: Licensee agrees that Licensor shall
have the right in its sole discretion and in a style and manner in which it
chooses, to print catalogs, sales sheets or brochures (hereinafter
"catalogs") wherein representative merchandise from licensees of Licensor
shall be displayed.
5. PERIODIC STATEMENTS: Within thirty (30) days after the first
day of the license period, and promptly on the 15th day of every calendar
month thereafter, Licensee shall furnish to Licensor complete and accurate
statements, certified to be accurate by Licensee, or if a corporation, by an
officer of Licensee, showing the sales volume of each Licensed Product
(itemized by Club, for each applicable Licensed Product), gross sales price,
itemized deductions from gross sales price, and net sales price of the
Licensed Product(s) distributed and/or sold by Licensee during the preceding
calendar month, together with any returns made during the preceding calendar
month. Such statements shall be furnished to Licensor whether or not any of
the Licensed Product(s) have been sold, or any payment is shown to be due
Licensor, during the calendar months in which such statements are due.
Licensee shall furnish to Licensor sufficient background information so as to
make such statements intelligible to Licensor, and on an annual basis, a
complete list of Licensee's customers to whom Licensed Product(s) have been
sold. Licensor agrees that it will not divulge said customer list to any
other licensee, to any other competitor licensing organization, or to any
competitor of Licensee. Receipt or acceptance by Licensor of any of the
statements furnished pursuant to this Agreement or of any sums paid hereunder
shall not preclude Licensor from questioning the correctness thereof at any
time, and in the event that any inconsistencies or mistakes are discovered in
such statements or payments, they shall immediately be rectified and the
appropriate payments made by Licensee. Late payment penalties, if any, shall
be made pursuant to Paragraph 4B. Upon demand of Licensor, Licensee shall at
its own expense, but not more than once in any twelve (12) month period,
furnish to Licensor a detailed statement certified by an independent
certified public accounting firm approved by Licensor showing the sales
volume of each Licensed Product (itemized by Club, for each applicable
Licensed Product), gross sales price, itemized deductions from gross sales
price and net sales price of the Licensed Product(s) covered by this
Agreement distributed and/or sold by Licensee to the date of the Licensor's
demand. All amounts payable pursuant to this Agreement shall be in U.S.
dollars only.
6. BOOKS AND RECORDS: Licensee shall keep, maintain and preserve
in its principal place of business for at least two (2) years following
termination or expiration of this Agreement or any renewal thereof, complete
and accurate records and accounts covering all transactions relating to this
Agreement and pertaining to the various items required to be shown on the
statements to be submitted by Licensee, including, without limitation,
invoices, correspondence and banking, financial and other records in
Licensee's possession or under its control. Such records and accounts shall
be available for inspection and audit (and copying at Licensor's expense) at
any time or times during or after the term or terms of this Agreement during
reasonable business hours and upon reasonable notice by Licensor or its
representatives. Licensee agrees not to cause or permit any interference
with Licensor or representatives of Licensor in the performance of their
duties of inspection and audit.
The exercise by Licensor, in whole or in part or at any time or times,
of the right to audit records and accounts or of any other right herein
granted, the acceptance by Licensor of any statement or statements or the
receipt and deposit by Licensor of any payment tendered by or on behalf of
Licensee shall be without prejudice to any rights or remedies of Licensor and
shall not stop or prevent Licensor from thereafter disputing the accuracy of
any such statement or payment.
If pursuant to its rights hereunder to audit and inspect Licensor
causes an audit and inspection to be instituted which thereafter discloses a
deficiency of three percent (3%) or more between the amount found to be due
to Licensor and the amount actually paid or credited to Licensor, then
Licensee shall be responsible for payment of the entire deficiency, together
with interest thereon at the then current prime rate of Chase Manhattan Bank
or its successor from the date such amount became due until the date of
payment, and the costs and expenses of such audit and inspection. If the
audit discloses a deficiency of less than three percent (3%) between the
amount found to be due to Licensor and the amount actually paid or credited to
Licensor, and if the amount actually paid or credited to Licensor plus the
deficiency exceeds the Guaranteed Compensation for the period covered by the
deficiency, then Licensee shall pay Licensor the amount of the deficiency
plus interest as calculated above.
7. INDEMNIFICATIONS AND PROTECTIONS: A. Licensor hereby agrees to
indemnify, defend and hold Licensee and its owners, shareholders, directors,
officers, employees, agents, representatives, successors and assigns harmless
from any claims, suits, damages or costs (including reasonable attorneys'
fees and expenses) arising from (i) challenges to Licensor's authority as
agent for and pursuant to authority granted by the Clubs to license the Logos
in connection with the manufacture, distribution, promotion, advertisement
and sale of the Licensed Product(s) or (ii) assertions to any claim of right
or interest in or to the Logos as authorized and used on the Licensed
Product(s), provided in each case that Licensee shall give prompt written
notice, cooperation and assistance to Licensor relative to any such claim or
suit, and provided further in each case that Licensor shall have the option
to undertake and conduct the defense of any suit so brought and to engage in
settlement thereof at its sole discretion.
B. Licensee shall assist Licensor, to the extent necessary,
in the procurement of any protection or to protect any of Licensees rights to
the Logos, and Licensor, if it so desires and in its sole discretion, may
commence or prosecute any claims or suits in its own name or in the name of
Licensee or join Licensee as a party thereto. Licensee shall notify Licensor
in writing of any infringements or imitations by others of the Logos of which
it is aware. Licensor shall have the sole right to determine whether or not
any action shall be taken on account of such infringements or imitations.
Licensee shall not institute any suit or take any action on account of any
such infringements or imitations without first obtaining the written consent
of Licensor to do so. Licensee agrees that it is not entitled to share in
any proceeds received by Licensor (by settlement or otherwise) in connection
with any formal or informal action brought by Licensor hereunder.
C. Licensee hereby agrees to indemnify, defend and hold
Licensor, the Clubs, the Leagues and the Office of the Commissioner of
Baseball and their respective owners, shareholders, directors, officers,
employees, agents, representatives, successors and assigns harmless from any
claims, suits, damages and costs (including reasonable attorneys' fees and
expenses) arising out of (i) any unauthorized use of or infringement of any
trademark, service mark, copyright, patent, process, method or device by
Licensee in connection with the Licensed Product(s) covered by this
Agreement, (ii) alleged defects or deficiencies in said Licensed Product(s)
or the use thereof, or false advertising, fraud, misrepresentation or other
claims related to the Licensed Product(s) not involving a claim of right to
the Logos, (iii) the unauthorized use of the Logos or any breach by Licensee
of this Agreement, (iv) libel or slander against, or invasion of the right of
privacy, publicity or property of, or violation or misappropriation of any
other right of any third party, and/or (v) agreements or alleged agreements
made or entered into by Licensee to effectuate the terms of this Agreement.
Licensor shall give Licensee notice of the making of any claim or the
institution of any action hereunder and Licensor may at its option
participate in any action. The indemnifications hereunder shall survive the
expiration or termination of this Agreement.
8. INSURANCE: Licensee agrees to obtain, at its own cost and
expense, comprehensive general liability insurance including product
liability insurance from an insurance company acceptable to Licensor,
providing adequate protection for Licensor, the Clubs, the Leagues, the
Office of the Commissioner of Baseball and Licensee against any claims suits
arising out of any of the circumstances described in Paragraph 7C above for
which insurer is able to provide insurance, in an amount no less than
$5,000,000.00 (five million dollars) per incident or occurrence, or
Licensee's standard insurance policy limits, whichever is greater, and with a
reasonable deductible in relation thereto. Such insurance shall remain in
force at all times during the license period and for a period of five years
thereafter. Within thirty (30) days from the date hereof, Licensee will
submit to Licensor a fully paid policy or certificate of insurance naming
Licensor, the Leagues and the Office of the Commissioner of Baseball as
additional insured parties and requiring that the insurer shall not terminate
or materially modify such policy or certificate of insurance without written
notice to Licensor at least thirty (30) days in advance thereof.
9. COPYMGHT AND TRADEMARK NOTICES AND REGISTRATIONS: Licensee
further agrees that in any instance wherein the Logos of the Clubs and/or the
Leagues are used, the following general notice shall be included (i.e., on
the product, on a label, on the packaging material or on a separate slip of
paper attached to the product): "The Major League Club insignias depicted on
this product are trademarks which are the exclusive property of the
respective Major League Clubs and may not be reproduced without their written
consent." Further, all products containing the Logos shall contain a hangtag
and label with Licensee's name stating "Genuine Merchandise" and containing
the Major League Baseball silhouetted batter logo and, where appropriate, the
Major League Baseball Cooperstown Collection logo or Major League Baseball
Authentic Diamond Collection logo. All Licensed Product(s) shall contain a
permanently affixed label that displays Licensee's name. All Licensed
Product(s) components which bear any of the Logos (embroidered emblems, cloth
or paper labels, hangtags, etc.) shall be manufactured in-house by Licensee
or shall be obtained only from one or more suppliers officially authorized by
Licensor to produce those components. All Licensee advertisements displaying
the Logos, all retailer advertisements featuring Licensed Product(s) and of
which Licensee has knowledge or any Licensed Product(s), shall contain the
words "Genuine Merchandise" and the silhouetted batter logo. Licensee shall
require those to whom it sells Licensed Product(s) directly or indirectly to
display the words "Genuine Merchandise" (or such other appropriate notice as
directed by Licensor) and the silhouetted batter logo in all advertisements.
All uses of the Logos shall also include any designations legally required or
useful for enforcement of copyright, trademark or service mark rights (e.g.,
"C", "R" or "TM"). Licensee shall submit a copy of its specifications for
all of the above notices (including copies of its artwork, layouts or mold
blueprints) to Licensor for its review. Licensor shall have the right to
revise the above notice requirements and to require such other notices as
shall be reasonably necessary to protect the interests of Licensor, the Clubs
and/or the Leagues in the respective Logos. Licensee agrees to advise
Licensor of the initial date of the marketing of each Licensed Product, and
upon request, to deliver to Licensor the required number and type of specimen
samples of the Licensed Product, labels or the like upon which the Logos are
used for use in procuring copyright, trademark and/or service mark
registrations in the name of and at the expense of the person, firm,
corporation or other legal entity owning the Logos, in compliance with any
laws relating to copyright, trademark and service mark registrations. Except
to the extent set forth in any schedules attached to this Agreement, Licensor,
the Clubs and/or the Leagues shall be solely responsible for taking
such action as it or they deem appropriate to obtain such copyright,
trademark or service mark registrations for its or their Logos. If it shall
be necessary for Licensee to be the applicant to effect any such registrations,
Licensee shall and hereby does assign all of its rights in
each such application and any resulting registration to Licensor or any other
appropriate owner thereof, and further agrees to execute all papers necessary
to effectuate and/or confirm such assignments. Licensee shall perform all
acts necessary and execute all documents necessary to effectuate its
registration as a user of the Logos where such registration is needed.
Licensee also agrees that, in any case where it employs the services of
photographers or artists in connection with the production, promotion,
marketing or distribution of the Licensed Product(s), it will require each
such photographer or artist to agree that the photographic or artistic works
he or she produces for Licensee shall be "works made for hire" for the
purposes of the copyright laws, and that to the extent such photographic or
artistic works may not qualify as "works made for hire," the copyright in
each such work is assigned to Licensee.
10. APPROVALS: Licensor shall have absolute approval of the
Licensed Product(s) and of all packaging, advertising and promotional
material at all stages of the development thereof. Licensee agrees to
furnish in a timely manner to Licensor, free of cost, for its written
approval as to quality and style, designs of each Licensed Product and
samples of each Licensed Product before its manufacture, sale, promotion,
advertisement or distribution, whichever first occurs, and samples of all
advertising, point-of-sale displays, catalogs, sales sheets and other items
that display or picture the Logos, and no such Licensed Product or other such
materials shall be manufactured, sold, promoted, advertised or distributed by
Licensee without such prior written approval. In particular, no use of any
Logo or Logos shall be made on stationery of Licensee (specifically
including, without limitation, letterhead, envelopes, business cards,
shopping bags, invoices, statements, packing slips, etc.) without Licensor's
express written approval in advance of any such use. In addition, no
irregulars, seconds or other Licensed Product(s) which do not conform in all
material respects to the approved samples may be distributed or sold without
the express written advance consent of Licensor. All such sales, if made,
shall bear Percentage Compensation as set forth in Paragraph 4B. Subject, in
each instance, to the prior written approval of Licensor, Licensee or its
agents may use textual and/or pictorial matter pertaining to the Logos on
such promotional display and advertising material as may, in its judgment,
promote the sale of the Licensed Product(s). All promotional display and
advertising material must contain and prominently display the official logo
of Licensor. Ten samples of each Licensed Product shall be supplied free of
cost to Licensor, and one to each Club whose Logos are used on such Licensed
Product(s). From time to time subsequent to final approval, a reasonable
number of production samples shall periodically be sent to Licensor free of
cost. Such samples shall also be sent upon any change in design, style or
quality, which shall necessitate subsequent approvals by Licensor.
Additional samples shall be supplied to Licensor upon request at no more than
cost. Licensor shall also have the right to inspect Licensee's plants,
warehouses or storage facilities at any reasonable time without notice.
In the event that any item or matter submitted to Licensor under this
Agreement for approval or consent shall not have been approved or consented
to, disapproved or denied, or commented upon within twenty (20) Licensor
business days after receipt thereof by Licensor (both Licensing Director and
Licensed Product Compliance), and Licensor (both Licensing Director and
Licensed Product Compliance) shall have received notice from Licensee that
comment is overdue by telegram or other written communication, and Licensor
shall not have commented within five (5) additional Licensor business days of
receipt of such notice, any items or matters so submitted shall be deemed
approved and consented to.
In any instance where any matter is required to be submitted to
Licensor for Licensor's approval, that approval shall be granted or withheld
in Licensor's sole discretion.
11. DISTRIBUTION: Licensee shall sell the Licensed Product(s) to
jobbers, wholesalers, distributors or retailers for sale or resale and
distribution to retail stores and merchants for their resale and distribution
or directly to the public. In the event Licensee sells or distributes a
Licensed Product at a special price directly or indirectly to itself,
including, without limitation, any subsidiary of Licensee, or to any other
person, firm or corporation related in any manner to Licensee or its
officers, directors or major stockholders, Licensee shall pay compensation
with respect to such sales or distribution based upon the price generally
charged the trade by Licensee.
12. GOODWILL: Licensee recognizes the great value of the publicity
and good will associated with the Logos and, in such connection, acknowledges
that such good will belongs exclusively to Licensor, the Clubs, the Office of
the Commissioner of Baseball and/or the Leagues and that the Logos have
acquired a secondary meaning in the minds of the purchasing public.
13. SPECIFIC UNDERTAKINGS OF LICENSEE: During the license period,
each additional license period, if any and thereafter, Licensee agrees that:
A. It will not acquire any rights in the Logos as a result
of its use thereof and all use of the Logos shall inure to Licensor's
benefit;
B. It will not, directly or indirectly, attack the title of
Licensor, the Clubs, the Office of the Commissioner of Baseball and/or the
Leagues in and to the Logos or any copyright, trademark or service mark
pertaining thereto, nor will it attack the validity of the license granted
hereunder, nor will it use the Logos in any manner other than as licensed
hereunder;
C. It will not at any time apply for any registration of any
copyright, trademark, service mark or other designation which would affect
the ownership of the Logos, or file any document with any governmental
authority or take any action which would affect the ownership of the Logos or
aid or abet anyone in doing so;
D. It will not harm, misuse or bring into disrepute the
Logos;
E. It will manufacture, sell, promote, advertise and
distribute the Licensed Product(s) in a legal and ethical manner and in
accordance with the terms and intent of this Agreement;
F. It will not create any expenses chargeable to Licensor
without the prior written approval of Licensor;
G. It will protect to the best of its ability the right to
manufacture, sell and distribute the Licensed Product(s) hereunder;
H. It will not use the Licensed Product(s) for combination
sales, as self-liquidating or free giveaways or for any similar method of
merchandising without the prior written consent of Licensor and will exercise
due care that its customers likewise will refrain from making such use of the
Licensed Product(s);
I. It will not, without the prior written consent of
Licensor, enter into any sublicense or agency agreement for the manufacture,
sale, promotion, advertisement or distribution of the Licensed Product(s);
J. It will not engage in tying practices, illegal restraints
of trade, or selling practices that exclude any members of the retail trade
for any reason other than poor credit history, known lack of integrity or
disregard for the rights of Licensor or Major League Baseball. Nothing in
the preceding sentence shall be deemed to require Licensee to violate any
other term of this Agreement;
K. It will not use, or knowingly permit the use of, the
Licensed Product(s) as a premium, except with the prior written consent of
Licensor and the specific negotiation of a higher royalty payment therefor.
For purposes of this subparagraph and Paragraph 19 below, the term "premium"
shall be defined as including, but not necessarily limited to, free or self-
liquidating items offered to the public in conjunction with the sale or
promotion of a product or service, including traffic building or continuity
visits by the consumer/customer, or any similar scheme or device, the prime
intent of which is to use the Licensed Product(s) in such a way as to
promote, publicize and/or sell the products, services or business image of
the third party company or manufacturer. "Premium" use shall also
specifically include distribution of the Licensed Product(s) for retail sale
through distribution channels (including, without limitation, catalogs)
offering earned discounts or "bonus" points based upon the extent of usage of
the offeror's product or service;
L. It will comply with such guidelines and/or requirements
as Licensor may announce from time to time. It will comply with all laws,
regulations and standards relating or pertaining to the manufacture, sale,
advertising or use of the Licensed Product(s) and shall maintain the highest
quality and standards, and shall comply with the requirements of any
regulatory agencies (including, without limitation, the United States
Consumer Safety Commission) which shall have jurisdiction over the Licensed
Product(s);
M. It guarantees that Licensor, Clubs, official Club and/or
Licensor retail stores, Club in-stadium concessionaires and the Clubs
belonging to The National Association of Professional Baseball Leagues
("NAPBL Clubs") will obtain the Licensed Product(s) for retail sale at lowest
possible wholesale prices and shall receive prompt shipments and/or
deliveries of the Licensed Product(s), without regard to the relatively small
volume their orders may represent. Licensor, Clubs and NAPBL Clubs may
obtain the Licensed Product(s) for their use, but not resale, at the
manufacturer's lowest possible price, which shall in no event be greater than
its lowest wholesale price;
N. It will furnish to Licensor, upon request of Licensor
(which shall be made only for reasonable cause and no more often than once
per year), a list of all its distributors, sales representatives and jobbers
for the Licensed Product(s), as well as a list of all its "trade names," said
list to include the company name, address, telephone number, territorial
representation and key contact name. Licensor agrees that it will not
divulge any information provided to it under this paragraph to any other
competitor licensing organization;
O. Concurrently with its execution of this Agreement, it
will provide Licensor with the names, addresses, telephone numbers and names
of principal contacts of each party (hereinafter referred to as
"Manufacturer"), both domestic and foreign, that Licensee desires or intends
to have produce one or more of the Licensed Product(s) in the event Licensee
desires not to be the manufacturer of such Licensed Product(s). This
information shall be set out in Schedule F of this Agreement and Licensee
shall specify the Licensed Product(s) Manufacturer will produce. In the
event Licensee wishes to substitute a Manufacturer for those listed in
Schedule F or wishes to add to the number of Manufacturers, Licensee shall
first provide Licensor with the information set out in Schedule F regarding
the proposed new Manufacturers for Licensor's written approval of such
Manufacturers. Licensee's failure to do so may result in termination of this
Agreement and/or confiscation and seizure of the Licensed Product(s).
Licensee shall ensure that:
(i) Manufacturer produces no merchandise bearing the Logos
other than the Licensed Product(s) described in Schedule F of this Agreement
unless authorized by Licensor;
(ii) Manufacturer produces the Licensed Product(s) only as and
when directed by Licensee and in accordance with the terms herein and in
compliance with all laws, regulations and governmental rules applicable to
the Licensed Product(s) and/or their manufacture;
(iii) Manufacturer does not supply the Licensed Product(s) to
any person, firm, corporation or business entity other than Licensee or to
such entities as may be authorized by Licensee and Licensor jointly; and
(iv) Manufacturer does not delegate in any manner whatsoever
its obligations with respect to the Licensed Product(s).
Prior to the delivery of the Licensed Product(s) from Manufacturer to
Licensee, Licensee shall submit to Licensor, free of cost, for its written
approval as to quality and style, at least two samples of the Licensed
Product(s) produced by Manufacturer;
P. It will not manufacture or allow the manufacture, or
accumulate inventory, of the Licensed Product(s), at a rate greater than its
average rate during the license period as the end of the license period
approaches;
Q. It will not sell the Licensed Product(s) to parties whom
it knows or reasonably should know will resell or distribute such Licensed
Product(s) outside the Licensed Territory;
R. It will not disclose any confidential, private,
restricted or otherwise nonpublic information concerning Major League
Baseball which, it acknowledges, it may become privy to during the term of
this Agreement;
S. It will not grant to any third person or entity a
security interest in the Licensed Product(s) without Licensor's prior written
approval.
T. It has not had and does not have an investment or
interest in casinos, any other form of legalized gambling enterprise, or any
activity that Licensor or any other Major League Baseball related entity has
made unauthorized or which is contrary to official policy of Major League
Baseball; and
U. With respect to any Licensed Product(s) manufactured
outside the United States, it will take receipt of goods at U.S. ports of
entry, (ii) it will not allow any entity in the United States, including but
not limited to distributors, wholesalers and retailers, to accept shipment of
the Licensed Product(s) from any non-U.S. manufacturer of such Licensed
Product(s), and (iii) it will distribute such Licensed Product(s) to third
parties, including but not limited to distributors, wholesalers and
retailers, from Licensee's principal place of business only.
14. APPROVAL OF MANUFACTURER, ETC.: Nothing contained herein may
be construed so as to imply endorsement of Manufacturer by Licensor, the
Office of the Commissioner of Baseball, the Leagues or the Clubs. Licensee
shall seek Licensor's written approval of Manufacturer prior to Licensee's
engagement of Manufacturer. Any approval of Manufacturer granted by Licensor
relates solely to the manufacturing of the Licensed Product(s) and shall not
constitute a grant of any right, title or interest in or to the Logos, nor to
any copyrights, service marks, trademarks or other property rights associated
therewith. Licensor hereby reserves the right to terminate in its discretion
the engagement of Manufacturer at any time. Additionally, Licensor may
confiscate goods or samples imported by Licensee or shipped by Manufacturer
that bear any of the Logos and that have not been approved by Licensor as to
quality.
15. ACKNOWLEDGEMENT OF RIGHTS: Licensee hereby acknowledges the
proprietary nature of all names and logos of the Major League Baseball Clubs,
the Leagues, the Office of the Commissioner of Baseball or Licensor and
acknowledges that all rights, title and interest to such names or logos
belong to the individual Clubs, the Leagues, the Office of the Commissioner
of Baseball and/or Licensor, as the case may be. Licensee represents that it
has not made any unauthorized use of names or logos of the Major League
Baseball Clubs, the Leagues, the Office of the Commissioner of Baseball or
Licensor and agrees that it will make no use of any such names or logos,
other than as provided in this Agreement, without the prior written consent
of Licensor, the Office of the Commissioner of Baseball or the appropriate
individual League or Club. Any use Licensee has made or will make of such
names and logos has not created or will not confer, as the case may be, any
rights or benefits upon it whatsoever, and any rights created by such use
shall inure to the benefit of the individual Clubs, the Leagues, the Office
of the Commissioner of Baseball and/or Licensor, as the case may be.
16. TERMINATION: A. Immediate Termination: Licensor shall have the
right to terminate this Agreement immediately upon the occurrence of any one
or more of the following events (herein called "defaults"):
(i) If Licensee fails to deliver to Licensor or to maintain in
full force and effect the insurance referred to in Paragraph 8 hereof; or
(ii) If any governmental agency or court of competent
jurisdiction finds that the Licensed Product(s) are defective in any way,
manner or form; or
(iii) If Licensee shall breach any one of the following
undertakings set forth in Paragraph 13 hereof: 13A through F, H through J,
Q, R or T; or
(iv) If Licensee shall undergo a change in majority or
controlling ownership.
B. Termination With Cure Period: Licensor shall have the
right to terminate this Agreement upon the occurrence of any one or more of
the following defaults, and Licensee's failure to cure such default(s)
completely within ten (10) business days from Licensee's receipt of notice
from Licensor:
(i) If Licensee fails to make any payment due hereunder on
the date due, at which time all monies which are owed during the current term
or renewal referred to in Schedule E of this Agreement shall become due and
payable to Licensor; or
(ii) If Licensee fails to deliver any of the statements
hereinabove referred to or to give access to the premises and/or license
records pursuant to the provisions hereof to Licensor's authorized
representatives for the purposes permitted hereunder; or
(iii) If Licensee is unable to pay its debts when due, or makes
any assignment for the benefit of creditors or an arrangement pursuant to any
bankruptcy law, or files or has filed against it any petition under the
bankruptcy or insolvency laws of any jurisdiction, county or place, or shall
have or suffer a receiver or trustee to be appointed for its business or
property, or be adjudicated a bankrupt or an insolvent. In the event the
license granted hereunder is terminated pursuant to this Paragraph
16(B)(iii), neither Licensee nor its receivers, representatives, trustees,
agents, administrators, successors and/or assigns shall have any right to
sell, exploit or otherwise deal with or in the Licensed Product(s) without
the prior written consent of Licensor; or
(iv) If Licensee does not commence in good faith to
manufacture, distribute and sell each Licensed Product throughout the
Licensed Territory within any twelve (12) month period, but such default and
Licensor's resultant right of termination shall apply only to the specific
Licensed Product(s) and/or the specific territory(ies) which or wherein
Licensee fails to meet said requirements; or
(v) If Licensee shall discontinue its business as it is now
conducted; or
(vi) If Licensee shall breach any of the undertakings set
forth in Paragraph 13 hereof, except as otherwise provided in Paragraph
16(A)(iii) above; or
(vii) If Licensee shall breach any of the terms of this
Agreement; or
(viii) If, in the periodic statements furnished pursuant to
Paragraph 5 hereof, the amounts owed to Licensor are significantly or
consistently understated.
Licensor's right to terminate this Agreement shall be without prejudice
to any other rights which it may have, whether under the provisions of this
Agreement, in law or in equity or otherwise. In the event any of these
defaults occurs and Licensor desires to exercise its right of termination
under the terms of this Paragraph 16, Licensor shall give notice of
termination in writing to Licensee. Any and all payments then or later due
from Licensee hereunder (including Advance Compensation) shall then become
promptly due and payable in full to Licensor and without set off of any kind;
i.e., no portion of any prior payments made to Licensor shall be repayable to
Licensee. Until payment to Licensor of any monies due it, Licensor shall
have a lien on any units of the Licensed Product(s) not then disposed of by
Licensee and on any monies due Licensee from any jobber, wholesaler,
distributor, sublicensee or other third par-ties with respect to sales of the
Licensed Product(s). Upon termination or expiration of the term hereof, all
rights, licenses and privileges granted to Licensee hereunder shall
automatically revert to Licensor and Licensee shall execute any and all
documents evidencing such automatic reversion.
17. FINAL STATEMENT UPON TERMINATION OR EXIIRATION: Licensee shall
deliver to Licensor, as soon as practicable, following expiration or
termination of this Agreement, a statement indicating the number and
description of the Licensed Product(s) on hand. Following expiration or
termination Licensee may manufacture no more Licensed Product(s), but may
continue to distribute its remaining inventory for a period not to exceed
sixty (60) days, subject to the terms of Paragraph 13(P) hereof and payment
of applicable royalties relative thereto; provided, however, that such
royalties shall not be applicable against Advance Compensation or Guaranteed
Compensation. Notwithstanding the foregoing, Licensee shall not manufacture,
sell or distribute any Licensed Product(s) after the expiration or
termination of this Agreement because of (a) the failure of Licensee to cause
the appropriate statutory notice of copyright, trademark, service mark or
user registration to appear wherever the Logos are used; (b) the departure of
Licensee from the quality and style approved by Licensor under the terms of
Paragraph 10 hereof, (c) the failure of Licensee to obtain the approval of
Licensor under the terms of Paragraph 1O hereof; or (d) the occurrence of an
event of default under the terms of Paragraph 16 hereof. Licensor shall have
the option to conduct physical inventories before termination and continuing
until the end of the 60-day sell-off period in order to ascertain or verify
such inventories and/or statement. Immediately upon expiration of the sell-
off period, Licensee shall furnish Licensor a detailed statement certified by
an officer of Licensee showing the number and description of Licensed
Product(s) on hand in its inventory and shall dispose of such inventory at
Licensor's direction and at Licensee's expense. In the event Licensee
refuses to permit Licensor to conduct such physical inventory, Licensee shall
forfeit its right hereunder to dispose of such inventory. In addition to
such forfeiture, Licensor shall have recourse to all other remedies available
to it.
18. INJUNCTION: Licensee acknowledges that its failure to perform
any of the terms or conditions of this Agreement, or its failure upon the
expiration or termination of this Agreement to cease the manufacture of the
Licensed Product(s) and limit their distribution and sale as provided in
Paragraph 17 hereof, shall result in immediate and irreparable damage to
Licensor. Licensee also acknowledges that there may be no adequate remedy at
law for such failures and that in the event thereof Licensor shall be
entitled to equitable relief in the nature of an injunction and to all other
available relief, at law and/or in equity.
19. RESERVATION OF RIGHTS: Licensor retains all rights not
expressly and exclusively conveyed herein, and Licensor may license firms,
individuals, partnerships or corporations to use the Logos, artwork and
textual matter in connection with other products, including other products
identical to the Licensed Product(s) contemplated herein. Licensor reserves
the right to use, or license others to use and/or manufacture, identical
items as premiums.
20. PAYMENTS AND NOTICES: All notices and statements provided for
herein shall be in writing, and all notices hereunder are to be sent to Major
League Baseball Properties, Inc., 245 Park Avenue, New York, New York 10167,
Attention: Vice President. All statements and payments shall be made to
Major League Baseball Properties and sent to an address designated by
Licensor.
21. WAIVER, MODIFICATION, ETC.: No waiver, modification or
cancellation of any term or condition of this Agreement shall be effective
unless executed in writing by the party charged therewith. No written waiver
shall excuse the performance of any act other than those specifically
referred to therein. No waiver by either party hereto of any breach of this
Agreement shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision hereof. The exercise of any right
granted to either party hereunder shall not operate as a waiver. The normal
expiration of the term of this Agreement shall not relieve either party of
its respective obligations accruing prior thereto, nor impair or prejudice
the respective rights of either party against the other, which rights by
their nature survive such expiration. Licensor makes no warranties or
representations to Licensee except those specifically expressed herein.
22. NO PARTNERSHIEP, ETC.: This Agreement does not constitute and
shall not be construed as constituting an agency, partnership or joint venture
relationship between Licensee and Licensor and/or the Clubs. Licensee shall
have no right to obligate or bind Licensor in any manner whatsoever, and
nothing herein contained shall give or is intended to give any rights of any
kind to any third persons.
23. NON-ASSIGNABILITY: Licensee acknowledges and recognizes: (a)
that it has been granted the license described in Paragraph I because of its
particular expertise, knowledge, judgement, skill and ability; (b) that it
has substantial and direct responsibilities to perform this Agreement in
accordance with all of the terms contained herein; (c) that Licensor is
relying on Licensee's unique knowledge, experience and capabilities to
perform this Agreement in a specific manner consistent with the high
standards of integrity and quality associated with Major League Baseball as a
national sport and with Major League Baseball licensed merchandise; and (d)
that the granting of the license under this Agreement creates a relationship
of confidence and trust between Licensee and Licensor. This Agreement is
personal to Licensee, and Licensee shall not sublicense or franchise any of
its rights hereunder, and neither this Agreement nor any of the rights of
Licensee hereunder shall be sold, transferred or assigned by Licensee without
Licensor's prior written approval and no rights hereunder shall devolve by
operation of law or otherwise upon any assignee, receiver, liquidator,
trustee or other party. Subject to the foregoing, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their
successors and assigns.
24. PARAGRAPH HEADINGS: Paragraph headings contained in this
Agreement are for convenience only and shall not be considered for any
purpose in governing, limiting, modifying, construing or affecting the
provisions of this Agreement and shall not otherwise be given any legal
effect.
25. CONSTRUCTION: This Agreement shall be construed in accordance
with the laws of the State of New York, which shall be the sole jurisdiction
for any disputes.
26. SEVERABILITY: The determination that any provision of this
Agreement is invalid or unenforceable shall not invalidate this Agreement,
and the remainder of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
27. TIME OF THE ESSENCE: Time is of the essence of all parts of
this Agreement.
28. ACCEPTANCE BY LICENSOR: This instrument, when signed by
Licensee or a duly authorized officer of Licensee if Licensee is a
corporation, shall be deemed an application for a license and not a binding
agreement unless and until signed by a duly authorized officer of Licensor.
The receipt and/or deposit by Licensor of any check or other consideration
given by Licensee and/or the delivery of any material by Licensor to Licensee
shall not be deemed an acceptance by Licensor of this application. The
foregoing shall also apply to any documents relating to renewals or
modifications hereof.
29. INTEGRATION: This Agreement, when fully executed, shall
represent the entire understanding between the parties hereto with respect to
the subject matter hereof and supersedes all previous representations,
understandings or agreements, oral or written, between the parties with
respect to the subject matter hereof.
30. SURVIVAL OF PROVISIONS: Paragraphs 2,6, 7C, 8,12,13A, B, C, D,
F, H, I, K, Q and R, 15, 17, 18, 19, 21, 22, 24, 25, 26, 30 and 31 shall
survive any termination or expiration of this Agreement.
31. MISCELLANEOUS: By signing below, Licensee acknowledges that
this Agreement is for the term specified in Schedule D only and that neither
the existence of this Agreement nor anything contained herein shall impose on
Licensor any obligation to renew or otherwise extend this Agreement after
expiration of the license period.
<PAGE>
SCHEDULE A
LOGOS
The names, word marks, logos, uniform designs, colors and color
combinations, trade dress, characters, symbols, designs, likenesses, visual
representations and such other similar or related identifications (but such
similar or related identifications must be approved in writing by Licensor in
advance of use) of the following noted organizations, events, programs and
product lines in connection with the marketing, promotion and sale of that
described in Schedule B hereof; (1) Major League Baseball Properties, Inc.,
(2) Baltimore Orioles, (3) Chicago Cubs, (3) Houston Astros, (4) San
Francisco Giants, and (5) Seattle Mariners.
SCHEDULE B
LICENSED PRODUCT(S)
***ALL LICENSED PRODUCTS SHALL CONFORM TO LICENSOR'S
THEN-CURRENT LABELING REQUIREMENTS. ***
1 . Cereal boxes referred to by Licensee as "Classic O's,"
measuring 14 oz. in size, and featuring Cal Ripken, Jr. in a uniform bearing
the Logos of the Baltimore Orioles.
2. Cereal boxes referred to by Licensee as "Houston Astr-O's,"
measuring 14 oz. in size, featuring Jeff Bagwell, Craig Biggio, and Ken
Caminiti in uniforms bearing the Logos of the Houston Astros, and packaged
with limited edition baseball trading cards (limited to 1,999 units produced)
in random boxes.
3. Cereal boxes measuring 14 oz. in size, featuring Barry Bonds in
a uniform bearing the Logos of the San Francisco Giants, and packaged with
limited edition baseball trading cards (limited to 700 units produced) in
random boxes.
4. Cereal boxes measuring 14 oz. in size, featuring Alex Rodriguez
in a uniform bearing the Logos of the Seattle Mariners, and packaged with
limited edition baseball trading cards (limited to 356 units produced) in
random boxes.
5. Cereal boxes referred to by Licensee as "Slammin' Sammy's
Cereal," measuring 14 oz. in size, featuring Sammy Sosa in a uniform bearing
the Logos of the Chicago Cubs, and packaged with limited edition baseball
trading cards (limited to 66 units produced) in random boxes.
Rights to utilize (i) the names, likenesses and/or signatures of any
individuals (including, without limitation, Jeff Bagwell, Craig Biggio, Barry
Bonds, Ken Caminiti, Cal Ripken, Jr., Alex Rodriguez and Sammy Sosa), (ii)
any copyright, trademark or other property or identifications belonging to
any entity other than those identified in Paragraph 1 and Schedule A, Logos
of this Agreement (including, without limitation, "Classic O's," "Houston
Astr-O's" and "Slammin' Sammy's Cereal"), or (iii) any mark, symbol, artwork,
language or text not listed in Schedule A, Logos above (including, without
limitation, jewel event or commemorative Logos), are not granted under this
Agreement. In the case of (i) above, Licensee must present to Licensor
written evidence of having obtained the proper authorization to utilize any
such names, likenesses and/or signatures.
<PAGE>
SCHEDULE C
LICENSED TERRITORY
For Licensed Product No. 1:
The States of Maryland, Virginia, North Carolina, South Carolina,
and Florida, the City of Philadelphia, PA, and the District of Columbia.
For Licensed Product No. 2:
The States of Texas, Florida and the City of New Orleans, LA.
For Licensed Product No. 3:
The State of Arizona and California (Northern region only).
For Licensed Product No. 4:
The State of Washington and the City of Miami, FL.
For Licensed Product No. 5:
The United States of America.
SCHEDULE D
LICENSE PERIOD
For Licensed Product No. 1:
April 1, 1999 -December 31, 1999
For Licensed Product Nos. 2-4:
May 15, 1999 - December 31, 1999
For Licensed Product No. 5:
May 15, 1999 - April 30, 2000
<PAGE>
SCHEDULE E
COMPENSATION
TOTAL GUARANTEED COMPENSATION: $125,000.00
PAYABLE AS:
(i) NON-RETURNABLE ADVANCE COMPENSATION due upon signing:
N/A
(ii) REMAINDER OF GUARANTEED COMPENSATION due as follows:
December 31, 1999 $100,000.00
Total 1999 Guarantee $100,000.00
April 30, 2000 $25,000.00
Total 2000 Guarantee $25,000.00
PERCENTAGE COMPENSATION
For Licensed Product No. 1:
One percent (1%) of net sales as defined in Paragraph 4B, or
$0.025 8 per unit sold, whichever is greater.
For Licensed Product Nos. 2-4:
Two percent (2%) of net sales as defined in Paragraph 4B.
For Licensed Product No. 5:
Two and one-half percent (2.5%) of net sales as defined in
Paragraph 4B, or $0.0645 per unit sold, whichever is greater.
In each of the above cases, Percentage Compensation shall be applied
against Guaranteed Compensation payable in the same calendar year only,
without carryover. Percentage Compensation attributable to premium sales of
the Licensed Products shall not be applied against Total Guaranteed
Compensation.
SCHEDULE F
MANUFACTURERS
Licensee agrees that at no time during the license or sell-off periods
shall it sell, directly or indirectly, to any of the Manufacturers listed
below, or to any individual or entity affiliated in any manner with any of
such Manufacturers, any Licensed Product(s) for subsequent sale or
distribution, without prior written approval of Licensor.
1) Licensed Product(s):
Name of Manufacturer:
Address:
Telephone:
Principal Contact:
Approved by Major League Baseball Properties, Inc.:
Initials/Title
2) Licensed Product(s):
Name of Manufacturer:
Address:
Telephone:
Principal Contact:
Approved by Major League Baseball Properties, Inc.:
Initials/Title
3) Licensed Product(s):
Name of Manufacturer:
Address:
Telephone:
Principal Contact:
Approved by Major League Baseball Properties, Inc.:
Initials/Title
SCHEDULE G
PRODUCT CREDIT
1. Licensee shall provide to Licensor merchandise credit in the
form of two (2) cases of each Licensed Product during each year of the
license period. Licensee shall ship at Licensee's expense and at Licensor's
direction such merchandise as Licensor shall request from time to time under
this merchandise credit.
2. Licensee acknowledges that it shall give good faith
consideration to donating the Licensed Products for charitable causes upon
Licensor's request.
MISCELLANEOUS
1. Licensee shall be permitted to distribute the Licensed Products
via the Internet; provided, however, that Licensee shall not distribute,
sell, or otherwise distribute or allow for the sale or distribution of,
directly or through others, the Licensed Products outside the Licensed
Territory, and shall include prominent language on the Internet site(s)
through which the Licensed Products are offered that Licensee may not fulfill
orders for delivery of the Licensed Products outside of the Licensed
Territory.
2. Except as otherwise directed by Licensor, Licensee shall comply
with the following guidelines regarding the Licensed Products:
(a) the Club's primary Logo must be featured in a prominent
manner on the front of each Licensed Product (apart from as depicted in a
uniform).
(b) the words "MAJOR LEAGUE BASEBALL TRADEMARKS AND
COPYRIGHTS ARE USED WITH PERMISSION OF MAJOR LEAGUE BASEBALL PROPERTIES,
INC." must be included on all packaging and display materials.
3. Licensee acknowledges and agrees that in no event shall the
baseball trading cards packaged with Licensed Product Nos. 2-5 be sold or
distributed separately.
4. Licensee acknowledges that it must comply with all provisions
of this Agreement, including, but not limited to, Paragraph 10 with regard to
approval of the cereal boxes and baseball trading cards for the Licensed
Products.
BRAND NAMES
Concurrently with its execution of this Agreement, Licensee will list
below the brand names that Licensee desires or intends to use on the Licensed
Product(s).
1) Licensed Product(s) Nos.:
Brand Name(s):
2) Licensed Product(s) Nos.:
Brand Name(s):
3) Licensed Product(s) Nos.:
Brand Name(s):
In the event Licensee wishes to substitute a brand name for those
listed above or wishes to add to the number of brand names, Licensee shall
first obtain Licensor's written approval of such brand names.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement:
MAJOR LEAGUE BASEBALL PROPERTIES, INC.,
as agent for the Major League Baseball Clubs
BY:____________________________
TITLE:_________________________
FAMOUS FIXINS, INC.
BY:____________________________
TITLE:_________________________
EXHIBIT 10.18
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 27th day of August 1999,
by and between Famous Fixins, Inc. ("Licensee"), a corporation organized
under the laws of the State of New York, having its principal place of
business at 250 West 57th street, Suite 2501, New York, NY 10107, and Tim
Duncan ("Licensor"), c/o Lon S. Babby, Williams & Connolly, 725 12th Street,
N.W., Washington, D.C. 20005.
WHEREAS, Licensee manufactures celebrity food products and, subject to
the terms hereof, has been granted the right to the use of the name and
likeness of Licensor on and in connection with the development, manufacture,
distribution, promotion, and sale of a line of limited edition cereal (the
"Cereal") and related merchandise bearing the Licensed Subject Matter (as
hereinafter defined) (the "Merchandise," and together with the Cereal, the
"Products").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to use the
name, photograph, characterization, likeness, voice, image, and biographical
data of Licensor (the "Licensed Subject Matter") in connection with the
development, manufacture, distribution, promotion, and sale of the Products
("the License"). This License shall be effective worldwide and shall
continue from the date hereof until the end of the 1999-2000 NBA basketball
season, unless extended pursuant to the terms hereof or unless terminated in
accordance with the terms and conditions of Paragraphs 8 or 9 of this
Agreement (the "Term"), provided, however, that all terms, including without
limitation Paragraphs 12 and the representations and warranties set forth
herein, capable of surviving shall survive the Term of this Agreement.
Notwithstanding the foregoing, if sales of the Cereal reach 800,000 boxes,
the License Term shall be automatically extended through the 2000-2001 NBA
basketball season, provided that in such event, Licensor shall receive from
Licensee an additional Warrant (as hereinafter defined) with an expiration
date of five (5) years from the date of grant to purchase ***** shares of the
Company's unregistered common stock at a purchase price equal to *****% of
the average of the daily volume-weighted average prices of the Company's
common stock during the thirty trading days following the date of such
extension.
Licensee acknowledges and agrees that the rights granted herein are those
associated with a license and that this Agreement shall not be
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
deemed or construed to be an assignment of Licensor's rights. Accordingly,
Licensor shall retain all rights in and to the Licensed Subject Matter and
all rights incidental or related thereto. Notwithstanding the foregoing, the
parties acknowledge and agree that Licensee's rights to use Licensed Subject
Matter shall automatically revert to Licensor upon the earlier of the
expiration or termination of this Agreement. Licensor is not prohibited,
prevented or in any way restricted by this Agreement from using, permitting
or licensing others to use the Licensed Subject Matter in connection with any
advertisement, promotion, merchandising, or public relations, including
personal appearances, or the sale of any product, service, or business.
Licensee hereby acknowledges and agrees that this Agreement is subject to the
terms and conditions of the NBA Group License Agreement dated September 18,
1995 (and any successor agreement thereto), which, among other things, may
allow the Licensed Subject Matter to be featured or used in connection with
products competitive with the Products.
2. Licensee's Obligations. Subject to the terms hereof, Licensee shall
develop, manufacture, distribute, promote, and sell the Products as soon as
practicable after the date hereof, but in no event later than the start of
the 1999-2000 NBA season, provided, however, that Licensee shall, in the
exercise of its business judgment, have final decision-making authority with
respect to the following: (a) the type and quantity of Products to be
developed and manufactured, subject to the terms of Section 3 hereof and
Licensor's other professional relationships and sponsorship agreements; (b)
the markets in which the Products are to be distributed and sold; (c) the
manner of distribution and sale of the Products; and (d) the volume and
nature of advertising for the Products. Notwithstanding the foregoing,
Licensee agrees (a) to distribute, promote, and sell the Products, at a
minimum, in the greater San Antonio, Texas area, North Carolina (including,
without limitation, the greater Winston Salem area), and the U.S. Virgin
Islands, (b) to provide for the sale and distribution of Products on
Licensor's website (www.slamduncan.com) and (c) to consult in a meaningful
way with Licensor, to submit to Licensor proposals with respect to the
foregoing items and to use its best efforts to meaningfully respond to and
accommodate Licensor's reasonable objections and input with respect to such
proposals. Licensee shall pay all costs and expenses in connection with the
development, promotion, manufacturing, packaging, shipping, distribution,
sales and promotion of the Products and Licensee shall handle all fulfillment
(including all check, money order and credit card transactions) and tracking
responsibilities from the sale of the Products, including, without
2
<PAGE>
limitation sales on Licensor's website. During the Term, Licensee agrees to
supply Licensor, at no expense, such quantities of Products as he may
reasonably request for his own personal use.
All rights, titles, and interests in and to the Cereal, their formulae and
secret ingredients shall be, and are specifically and entirely, reserved to
Licensee and may be fully exploited without regard to the extent to which
such rights may be competitive with this Agreement or the rights granted
hereunder, provided, however, that the type of Cereal bearing the Licensed
Subject Matter shall not be used in connection with any other licensor in any
market in which the Products are sold.
3. Approvals. All Products developed pursuant to the terms hereof shall
be developed in consultation with Licensor, and shall be subject to
Licensor's reasonable approval prior to Licensee's manufacture or marketing
of such Products. In addition, all materials created by public view or
distribution hereunder, including but not limited to the packaging, design,
advertising materials, press materials and all other materials to be used in
connection with the Products (the "Materials") shall be subject to Licensor's
review and prior approval. In order to facilitate Licensor's review and to
maintain the high standards, style, appearance, propriety and quality
association with Licensor, Licensee shall submit to Licensor (as applicable)
the drafts, samples, concept, keylines, artwork, video, audio and/or
storyboard for any proposed Products or Materials using or associated with
the Licensed Subject Matter before commencing production of any such
Materials or Products. After a proposal has been approved as set forth
above, Licensee shall not depart from the proposal in any respect without
Licensor's further review and prior approval. Licensee hereby acknowledges
and agrees that Licensor will not be shown on the Materials or the Products
in an NBA uniform without the express written consent of the National
Basketball Association.
4. Personal Appearance. Subject to Licensor's professional commitments,
Licensor shall appear at a press conference/launch party (the "Personal
Appearance"), not to exceed one (1) hour in length, in the city of San
Antonio, Texas at a time and at a site mutually acceptable to Licensor and
Licensee. During the Personal Appearance, Licensor agrees to autograph 50
jerseys to be provided by Licensee, provided, however, that any such
autograph shall be personalized and shall refer to each recipient by name.
During the Term, Licensor also agrees to autograph 150 boxes of cereal.
Licensee hereby acknowledges and agrees that any items autographed by
Licensor shall only be used by Licensee for promotional purposes and shall
not be made available for
3
<PAGE>
resale. The failure of Licensor to provide the Personal Appearance as set
forth herein, if such failure is due solely to Licensee's failure to request
such Personal Appearance in a timely fashion, shall not be deemed to be a
breach of this Agreement by Licensor.
5. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products.
6. Compensation. As full and complete compensation to Licensor for
entering into and performing the terms and conditions of the Agreement,
Licensee shall pay Licensor a license fee via cashier's check or wire
transfer (the "Licensing Fee") on or prior to September 26, 2000 (and, if the
Term is extended pursuant to the terms of Section 1 hereof, on or prior to
September 26, 2001) in an amount equal to ***** percent (*****%) of all gross
revenues received by Licensee from the sale of the Cereal, provided, however,
that in the event that sales of the Cereal equal or exceed 800,000 boxes at
any time during the Term, then Licensee shall immediately notify Licensor and
pay Licensor within thirty (30) days of such notification, an additional fee
in an amount equal to four percent (4%) of all gross revenues received by
Licensee from the sale of such 800,000 boxes of Cereal, and provided,
further, that, in such event, the Licensing Fee shall be increased from,
***** percent (*****%) to ***** percent (*****%) of all gross revenues
received by Licensee from sales of the Cereal in excess of 800,000 boxes.
Licensee shall also pay Licensor ***** percent (*****%) of all gross profits
received by Licensee from the sale of the Merchandise (the "Merchandise
Royalty"). For purposes of this Paragraph 6, all payments not received on
the date due shall be deemed "past due". Such past due payments shall bear
interest from the date due until payment is received at a rate of four
percent (4%) per month or the maximum rate permissible by law, whichever is
less. The imposition of interest provided for in this Section shall be in
addition to any other remedies available to Licensor under this Agreement or
otherwise. In addition, as further consideration for this Agreement,
Licensor will receive a warrant (a "Warrant") to purchase ***** shares of the
Licensee's unregistered common stock at a purchase price equal to $***** per
share with an expiration date of five years from the date hereof upon the
signing of this Agreement. A form of Warrant Agreement is attached hereto as
Exhibit A. Licensee agrees to pay all arbitration fees and reasonable
attorney's fees incurred by Licensor in the enforcement of Licensee's
obligations hereunder.
4
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
7. Accounting. Licensee shall render a detailed accounting of all Product
sales to Licensor on a quarterly basis. Each accounting shall show both
quarterly and cumulative gross revenues for the Products. Licensee agrees
that it will keep accurate and complete records and books of account showing
all Products and merchandise shipped by it and prices thereof related to
Licensor. Licensor, or Licensor's representatives, shall have the right at
reasonable times and on reasonable notice to inspect and make copies of the
Licensee's books and records, at Licensor's expense, in so far as they relate
to the computation of Licensing Fees and Merchandise Royalties to be paid to
Licensor hereunder; provided, however, that if any such inspection discovers
an accounting discrepancy indicating that the aggregate amount of Licensing
Fees or Merchandise Royalties due to Licensor (but which remain unpaid by
Licensee) equals or exceeds Five Thousand Dollars ($5,000), then Licensee
shall pay, within ten (10) business days, all costs and expenses of said
inspection, as well as the full amount of unpaid Licensing Fees or
Merchandise Royalties, plus interest from the date such Licensing Fees or
Merchandise Royalties were originally due until the date of payment at a rate
of 4% above the Primate Rate as published from time to time in The Wall
Street Journal (East Coast Edition).
8. Most Favored Nation. Licensee hereby represents and warrants that the
aggregate amount of compensation, of any kind, including without limitation,
the amount of the Licensing Fee, the Merchandise Royalty, the number of
Warrants (including the Warrant exercise price) or any other equity of the
Licensee is equal to or greater than the aggregate amount of compensation,
warrants or licensing fees or royalties paid or incurred by Licensee to any
other licensor with respect to the advertisement, promotion, distribution and
sale of comparable quantities of products manufactured or sold by Licensee.
To the extent that any future agreement or amendment or other modification to
any existing Licensee agreement (written or oral) with any other licensor
provides compensation, licensing fees, royalties, or warrants (including the
warrant exercise price) or any such equity of the Licensee to any such
licensor greater than the aggregate compensation, licensing fees, royalties,
warrants or any other equity of Licensee paid to Licensor for sales of
comparable quantities of products, Licensee shall provide Licensor with
immediate notice of such greater compensation, licensing fees, royalties or
warrants (including the warrant exercise price) or any other equity of the
Licensee and Licensee agrees to amend the terms and conditions of this
Agreement, in Licensor's sole and absolute discretion, to provide the same
compensation, licensing fees, warrants or other equity. Such amendment is to
be effective as of
5
<PAGE>
the same day that the more favorable terms and conditions were effective with
respect to such other licensor.
9. Insurance. Licensee shall obtain and maintain (and provide Licensor
evidence of) insurance coverage for general liability in accordance with
industry standards and shall provide Licensor (a) with notice of the amount
of such insurance obtained (which shall not be less than $2,000,000), the
carrier thereof and any deductible, retention or co-insurance with respect
hereto and (b) written proof that such insurance specifically names Licensor
as an additional insured or loss payee, as appropriate. The obligations set
forth in this Paragraph 9 shall survive termination or expiration of this
Agreement.
10. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach, (b) Licensee becomes insolvent,
files a petition in bankruptcy or has a petition in bankruptcy filed against
it which is not dismissed within fifteen (15) days, (c) Licensee discontinues
production and distribution of the Products, (d) Licensee uses unapproved
Products or Materials, or (e) Licensee uses the Licensed Subject Matter on,
or in connection with, any product or service not licensed by Licensor under
this Agreement. The parties acknowledge and agree that Licensor's right to
terminate this Agreement upon the occurrence of any of the events set forth
above in this Paragraph 10 shall not waive or limit Licensor's rights or
remedies otherwise available, including, without limitation, Licensor's right
to seek monetary damages, equitable relief or any other remedy, in law or in
equity, against Licensee.
11. Licensee Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; or (b) Licensor has engaged in
conduct resulting in a conviction (after all appeals) of a felony crime
involving moral turpitude or a crime involving use or possession of
controlled substances. The parties acknowledge and agree that Licensee's
right to terminate this Agreement upon the occurrence of any of the events
set forth above in this Paragraph 11 shall not waiver or limit Licensee's
rights or remedies otherwise available, including, without limitation,
Licensee's right to seek monetary damages, equitable relief or any other
remedy, in law or in equity, against Licensor.
6
<PAGE>
12. Indemnification. Licensor shall have no responsibility or liability
whatsoever to any other party for any actions or omissions in the
manufacture, marketing, sale or use of any Products or for any death, bodily
or personal injury or loss occurring in connection with the manufacture,
marketing or sale of any Products. Licensee agrees to protect, indemnify and
hold Licensor, his agents and representatives, harmless from and against any
and all expenses, damages, claims, suits, actions, judgments and costs,
including reasonable attorney's fee, arising out of any action or proceeding
by any third party based upon: (a) any material breach or alleged breach by
Licensee of any representation, warranty, covenant or agreement made by it
herein; (b) Licensee's use of the Materials produced hereunder; (c) the
manufacture, marketing, sale or use of any Products, including, without
limitation, the Personal Appearance, conducted by Licensor in connection with
or on account of Licensor's obligations pursuant to this Agreement; (e) any
unauthorized use by Licensee of any individual intellectual property right,
trademark, service mark, or copyright with respect to or used in connection
with the Licensed Subject Matter; (f) any materials supplied by Licensee in
connection with the services provided by Licensor hereunder; (h) any act or
omission of Licensee in connection with this Agreement; or (i) the
enforcement of Licensee's indemnification obligation hereunder. Licensee's
indemnification obligations hereunder shall survive the expiration and
termination of this Agreement.
13. Licensee Representations and Warranties. Licensee represents and
warrants that it has the full right, power, capacity and authority to enter
into and fully perform this Agreement with Licensor, and carry out each and
all of the terms and conditions hereof; that there is no contract or
understanding with any other person or entity which would interfere with
Licensee's performance of its obligations herein; and the consent of no other
person or entity is necessary for Licensee to enter into this Agreement.
Licensee hereby represents and warrants that the undersigned officer is
authorized to execute this Agreement on behalf of Licensee and, as executed,
this Agreement shall be a legally binding obligation of Licensee.
14. Assignment. Neither Licensor nor Licensee shall assign this Agreement
without the prior written consent of the other party, except that
Licensor shall have the right to assign the financial benefits of this
Agreement, without Licensee's consent, to any company owned or controlled by
him.
7
<PAGE>
15. Notices. For the purposes of this Agreement, any notice or demand
required to be given will be given in writing and shall be hand delivered,
sent by facsimile transmission or mailed by Certified Mail, postage prepaid,
to the address herein set forth, or to such other address as the parties may
hereafter substitute. Notice shall be deemed received on the date of hand
delivery or the date sent by facsimile transmission so long as written
documentation verifies such delivery.
If to Licensee: Jason Bauer,
c/o Famous Fixins
250 West 57th St., Suite 2501,
New York, NY 10107
If to Licensor: Tim Duncan
c/o Lon S. Babby, Esq.
Williams & Connolly
725 12th Street, N.W.
Washington, D.C. 20005
16. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other, (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever. As an independent contractor and not an employee of
Licensee, Licensor shall be responsible for compliance with all federal,
state and local income tax laws, social security and unemployment benefits,
and worker's compensation insurance. There shall not be any withholding for
federal, state or local income tax purposes.
17. Governing Law and Jurisdiction. The validity, performance,
construction and effect of this agreement shall be governed by New York law,
without giving effect to any otherwise applicable principles of conflicts of
laws. Should a dispute arise regarding the terms of this Agreement or any
matter arising out of or relating to this Agreement, such dispute shall be
settle by arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. The parties agree that the decision of the
arbitrator is final and judgment upon award may be entered in any court
having jurisdiction thereof. In the
8
<PAGE>
event of any arbitration arising out of, or based upon this Agreement brought
by either party against each other, the prevailing party shall be entitled to
recover from the other its reasonable attorney's fees in connection therewith
in addition to the costs of such action.
18. Entire Agreement. This Agreement sets forth the entire understanding
of the parties with respect to its subject matter and supersedes all prior
discussion, understandings and agreements. No waiver, modification, or
addition to this Agreement shall be valid unless reduced to writing and
signing by both parties. If any provision of this Agreement shall be held
void, voidable, invalid, or inoperative, no other provision of this Agreement
shall be affected as a result thereof, and, accordingly, the remaining
provisions of this Agreement shall remain in full force and effect as though
such void, voidable, invalid, or inoperative provision had not been contained
therein.
19. Waiver. The failure of either party hereto to insist on compliance
with any provision of this Agreement shall not be considered as a waiver by
such party of subsequent compliance with the same or any other provision.
20. Section Headings. Section headings contained hereunder are solely for
the convenience of the parties and none shall be deemed to affect the meaning
or construction of any provisions herein.
21. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but both of which, taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------------
Jason Bauer, President
LICENSOR: By: /s/ Tim Duncan
----------------------------
Tim Duncan
9
EXHIBIT 10.19
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
[Letterhead of NEW YORK METS NATIONAL LEAGUE BASEBALL CLUB]
Mark Bingham
Senior Vice President,
Marketing and Broadcasting
September 10, 1999
Jason Bauer
President & CEO
Famous Fixins, Inc.
250 West 57th St.
Suite 2501
New York, NY 10107
Re: Shea Stadium Promotion Agreement
Dear Mr. Bauer:
I am writing to confirm the agreement reached between Sterling
Doubleday Enterprises, L.P. ("SDE"), owner and operator of the New York Mets
National League Baseball team (the "Mets"), and Famous Fixins, Inc. ("Famous
Fixins"), for promotional rights during the 1999 and 2000 baseball seasons in
connection with the sale and marketing of the Product (as defined below).
It is SDE's understanding that Famous Fixins has entered into, and
shall maintain in effect throughout the term hereof, a retail license
agreement (the "MLBP License") with Major League Baseball Properties ("MLBP")
permitting it to produce and sell a cereal product identified by the name and
logos of the Mets (the "Product"). It is also SDE's understanding that
Famous Fixins has entered into, and shall maintain in effect throughout the
term hereof, a license agreement (the "MLBPA License") with the Major League
Baseball Player's Association ("MLBPA") permitting it to feature the images
of eight or more Major League Baseball players on the Product. If Famous
Fixins decides to feature individual players or groups of less than eight
players on the Product, the parties will obtain the consent of each such
player featured.
Subject to and contingent upon Famous Fixins' compliance with the terms
of the MLBP License and the MLBPA License, SDE has agreed to provide its
approval of the sale of the Product, and to provide the following marketing
and promotional support in connection with the sale and marketing of the
Product:
1. SDE agrees that it shall communicate to MLBP its approval of the
use of the Mets name and logos on the Product, as contemplated by the MLBP
retail license agreement.
2. In the event that the parties decide to feature individual Mets
players or groups of less that eight players on the Product, SDE will
cooperate in good faith with Famous Fixins' efforts to obtain the consent of
the players for the use of their names and likenesses on the Product. The
selection of the participating players shall be as mutually agreed upon by
the parties, with each party's approval not to be unreasonably withheld. (The
parties hereby agree that at least one version of the Product will feature
Mike Piazza alone, and that such version will be produced and distributed
during at least 12 months within the period from the date hereof through
December 31, 2000.) Any compensation required to be paid to such individual
players shall be the responsibility of SDE, provided that it
<PAGE>
shall not be unreasonable for SDE to withhold its approval of any
participating player based on the fee required by such player.
3. SDE will promote the sale of the Product in:
* One 15-second advertisement displayed on the Diamond Vision
scoreboard at Shea Stadium (the "Advertisement"). In 1999 the Advertisement
will be displayed during each Mets home game from August 6, 1999 through the
end of the regular season. In 2000 the Advertisement will be displayed
during each regular season home game at Shea Stadium (the "Stadium"').
* Two appearances by Mr. Met in 1999 and six appearances in 2000
at mutually agreed upon retail stores that sell the Product.
* SDE will allow Famous Fixins to distribute Product samples at
Stadium turnstiles during three mutually agreed upon regular season home
games in 1999 and five mutually agreed upon regular season home games in
2000.
* Placement of Product advertisements on the backs of 100,000 Mets
pocket schedules in 2000.
* One full page, four color, Product advertisement in the 2000 New
York Mets Yearbook.
All advertising hereunder shall be produced by Famous Fixins and
shall be subject to the approval of SDE, not to be unreasonably withheld.
4. Famous Fixins will receive the use of a 15-person Diamond View
Suite at the Stadium on one mutually agreed upon game date in 1999, and on
three mutually agreed upon games dates in 2000.
5. Famous Fixins will receive four tickets to each of ten mutually
agreed upon Mets regular season home games in 1999 (for a total of 40 regular
season tickets) and the right to purchase four tickets to each of the first
three Mets 1999 playoff games at the Stadium (if any). Should fewer than
three home playoff games be played, Famous Fixins will not receive any
substitute value.
6. Famous Fixins will receive four tickets to each of 30 mutually
agreed upon regular season Mets home games in 2000 (for a total of 120
tickets).
7. SDE will permit Famous Fixins to conduct and promote one contest in
each of 1999 and 2000 and to award to retail purchasers of the Product one
(1) grand prize, three (3) second prizes, and five (5) third prizes for each
contest, as follows:
* 1999 Grand Prize: Weekend (two nights) trip for two to Mets
spring training in Port St. Lucie, Florida. Famous Fixins will provide, at
its own expense, round-trip airfare, and SDE will provide hotel
accommodations, a car rental in Port St. Lucie, and two tickets to one spring
training game.
* 1999 Second Prize: Mets jersey autographed by one player that
appears on the 1999 Product.
* 1999 Third Prize: Four tickets to one Mets regular season home
game and the opportunity to attend that game's batting practice on the field.
* 2000 Grand Prize: Opportunity to appear in a non-official Mets
team photograph.
2
<PAGE>
* 2000 Second Prize: "Honorary bat boy or bat girl" for one day.
(Opportunity to dress in a Mets uniform and to attend batting practice on the
field.)
* 2000 Third Prize: National league baseball signed by a player
that appears on the 2000 Product.
All contest promotional materials shall be subject to SDE's
approval, not to be unreasonably withheld.
The back panel of the Product shall be used by SDE for Mets promotional
content. The content, layout and artwork of the back panel shall be subject
to Famous Fixins' approval, not to be unreasonably withheld. The content,
layout, and artwork of the remaining Product panels shall be subject to SDE's
approval, not to be unreasonably withheld.
In exchange for the foregoing, Famous Fixins will pay SDE *****% of
the Net Sales (as defined below) of the Product grossed by Famous Fixins
during the term of this agreement (including all renewals). Payments shall
be made within forty-five (45) days of the close of each quarter, accompanied
by a summary of the applicable Net Sales. The first quarter shall conclude
on December 31, 1999, and the first statement shall be due on or before
February 15, 2000.
"Net Sales" shall mean gross sales based on the wholesale price to the
retail trade less quantity discounts and actual returns, but no deduction
shall be made for uncollectible accounts, commissions, taxes, discounts other
than quantity discounts, such as cash discounts and discounts attributable to
the issuance of a letter of credit, or any other amount.
This agreement shall be automatically renewed on an annual basis unless
SDE elects to terminate the agreement by providing written notice of such
termination on or before December 31, 2000, or on or before any anniversary
thereof, provided that SDE shall provide the same or comparable promotional
support and cooperation during each year during which this agreement remains
in effect.
Please sign below to indicate your assent to the foregoing terms and
return the signed letter to my attention.
This letter shall be a binding and enforceable agreement and absent the
execution of a more formal contract, a court may supply consistent additional
terms as necessary to carry out the parties' intent.
Sincerely,
/s/ Mark Bingham
Agreed to and Accepted by:
Famous Fixins, Inc.
/s/ Jason Bauer
- ------------------------------
By:
Title: President
9/21/99
- -----------------------
Date
3
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
EXHIBIT 10.20
FINANCIAL CONSULTING AGREEMENT
Mr. Jason Bauer
President
Famous Fixins Inc.
250 West 57th Street
New York, NY 10107
Dear Mr. Bauer,
This Financial Consulting Agreement (the "Agreement") is made and
entered into as of the 9th day of September 1999, by and among Famous Fixins
Inc. ("the Company") and First Atlanta Securities, LLC ("FAS"). The Company
hereby retains FAS for the purpose of providing to the Company financial
consulting services as enumerated herein, and FAS agrees to be retained to
provide such services, pursuant to the terms and conditions set forth herein.
1. Term. The term of this Agreement will be one year commencing as of
September 9 1999. This Agreement may be cancelled upon thirty (30) days
written notice by either party.
2. Financial Consulting Services. During the term hereof, FAS agrees to
provide financial consulting services to the Company in the form of: (i)
evaluating the Company's capital requirements for funding growth and
expansion of the Company's operations; (ii) advising the Company as to
alternative modes and sources of financing; (iii) analyzing the impact of
business decisions, policies, and practices on the value of the Company's
securities; and (iv) bringing to the attention of the Company possible
business opportunities and evaluating business opportunities generally,
whether or not such opportunities are originated by FAS or others. Such
services will be available to the Company upon written request made to FAS by
the President of the Company. FAS agrees to devote such time, attention, and
energy as may be necessary to respond to proper requests by the Company for
services hereunder. Nothing herein shall be construed, however, to require
FAS to provide a minimum number of hours of service to the Company or to limit
the right of FAS to perform similar services for the benefit of persons
or entities other than the Company.
3. Compensation. As compensation for FAS's services hereunder, the
Company will pay to FAS a cash fee equal to ten percent (10%) of the
aggregate purchase price of the Securities purchased by or through any
investor or intermediary identified to the Company by FAS in Addendum A
hereto, which Addendum may be revised from time to time during the term of
this Agreement, less the amount of any finder's fee payable by the Company to
such intermediaries in connection with the sale of the Securities. The
Company shall pay each cash fee owed to FAS hereunder upon the closing of the
transaction for which the cash fee is earned, and it shall and hereby does
authorize the escrow agent for each such transaction to deduct from the
aggregate purchase price of the Securities the entire amount of all cash fees
so owed and to pay that amount directly to FAS upon the closing of the
transaction. The Company shall also cause the escrow agreement to require for
the breaking of escrow the consent of FAS, whose consent shall be on its own
behalf and in its own interest only, and not on behalf of or as
representative or agent for any purchase or other party.
In addition, the Company shall issue to FAS a warrant entitling FAS or its
designees to purchase 100,000 shares, subject to adjustment (the "Warrant"),
of the Company's Common Stock, exercisable at $1.00 per share (the "Common
Stock"). The Company agrees to register the common shares underlying the
warrant, on the same registration statement that the Company will be filing
on behalf of the investors. The registration statement may be filed on any
form the Company's counsel deems appropriate. The expense of such filings
shall be borne by the Company. The Warrant shall be exercisable at any time
after the first date after which the bid price per one share of Common Stock
quoted on any securities exchange or any NASDAQ system has exceeded $1.00.
The Warrant shall expire 5 years from the date hereof. All compensation
provided from this agreement is subject to adjustment so that no rule or
applicable law is contravened, is which such compensation shall be adjusted
so as not to contravene such rule, regulation or law.
4. Finder's Fee/Mergers & Acquisitions. In addition to the compensation
and expenses paid or payable to FAS pursuant to Paragraphs 3 and 6, the
Company agrees that, if FAS, directly or indirectly, introduces the Company,
during the term of this Agreement, to any person or entity that during the
term hereof or within six months following the term hereof, becomes a party
to a merger, acquisition, joint venture or other similar transaction with the
Company or any affiliate thereof, then the Company shall pay to FAS a
finder's fee paid in cash.
Each finder's fee payable to FAS under this Agreement shall be
calculated as a percentage of the Transaction Value (as defined herein) in
accordance with the following scale:
5% on the first $5,000,000
4% on the amount from $5,000,001 to $6,000,000
3% on the amount from $6,000,001 to $7,000,000
2% on the amount from $7,000,001 to $8,000,000
1% on the amount above $8,000,000
"Transaction Value" shall mean the aggregate value of all cash,
securities and other property and valuable consideration of every kind either
(i) transferred to the Company and its affiliates in connection with any
transaction involving any investment capital, loan or any other equity or
debt financing for, or acquisition of, the Company or any affiliate thereof,
or in connection with an acquisition of equity or assets thereof or (ii)
transferred by the Company and its affiliates in any transaction involving an
investment in or acquisition of any third party, or acquisition of the equity
or assets thereof, by the Company or any affiliate thereof or (iii)
transferred or otherwise contributed by all parties to enter into any joint
venture or similar joint enterprise or undertaking with the Company or any
affiliate thereof. The aggregate value of all such cash, securities and
other property and valuable consideration shall be the aggregate fair market
value thereof as determined jointly by FAS and the Company, or by an
independent appraiser jointly selected by FAS and the Company.
5. Right of First Refusal. During the term of this Agreement, FAS shall
have a right of first refusal to manage any private placement of securities
by or for the Company, any affiliate of the Company or any future affiliate
or subsidiary of the Company, provided, however, that FAS offers terms
comparable to any other placement agent. In addition, FAS shall have a
right of first refusal to manage any private placement of securities by or
for the Company, any affiliate of the Company or any future affiliate or
subsidiary of the Company for a period of six (6) months commencing on the
date of any transaction giving rise to the payment of a fee pursuant to
Paragraph 4 above, provided, however, that FAS offers terms comparable to any
other placement agent.
6. Retainer & Expenses. The Company shall pay to FAS, upon the
execution of this agreement, a non-refundable retainer of $25,000.00. The
retainer shall be paid in capital stock of the company. These shares shall
be issued based upon the closing bid price for the shares of the company on
the date the engagement agreement is signed. The shares shall be included
for registration with the next registration statement the company effects not
including the one already filed. The retainer will be used by FAS for all
out of pocket expenses related to the contemplated financing, as well as for
all out of pocket expenses relating to travel for due-diligence purposes (for
Capital Markets and Research employees). The retainer will be deducted from
the cash fees earned upon the completion of the financing contemplated
herein.
7. Independent Contractor. FAS and the Company hereby acknowledge that
FAS is an independent contractor. FAS shall not hold itself out as, nor
shall it take any action from which others might infer that it is a partner
or agent of, or joint venture with, the Company. In addition, FAS shall take
no action which binds, or purports to bind, the Company.
8. Liability of FAS. The Company acknowledges that all opinions and
advice, whether oral or written, given by FAS to the Company in connection
with this Agreement are intended solely for the benefit and use of the
Company in considering the transaction to which they relate, and the Company
agrees that no person or entity other than the Company shall be entitled to
make use of or rely upon the advice of FAS to be given hereunder, and no such
opinion or advice shall be used by the Company for any other purpose or
reproduced, disseminated, quoted or referred to by the Company in
communications with third parties at any time, in any manner or for any
purpose, nor may the Company make any public references to FAS or use FAS's
name in any annual report or any other report or release of the Company
without FAS's prior written consent, except that the Company may, without
FAS's further consent, disclose this Agreement (but not information provided
to the Company by FAS) in the company's filings with the Securities and
Exchange Commission, if such disclosure is required by law.
9. Notices. Except as otherwise specifically agreed, all notices and
other communications made under this Agreement shall be in writing and, when
delivered in person or by facsimile transmission, shall be deemed given on
the same day if delivered on a business day during normal business hours, or
on the first day of business day following delivery in person or by facsimile
outside normal business hours, or on the date indicated on the return receipt
if sent registered or certified mail, return receipt requested. All notices
sent hereunder shall be sent to the representatives of the party to be
noticed at the addresses indicated respectively below, or at such other
addresses as the parties to be noticed may from time to time by like notice
hereafter specify:
If to the Company: Famous Fixins, Inc.
250 W. 57th St. #2501
NY, NY 10107
If to FAS: First Atlanta Securities, LLC
5500 Interstate North Parkway, Ste. 515
Atlanta, GA 30328
Attn: Vince Sbarra
10. Entire Agreement. This Agreement contains the entire agreement between
the parties. It may not be changed except by agreement in writing signed by
the party against whom enforcement of any waiver, change, discharge, or
modification is sought. Waiver of or failure to exercise any rights provided
by this Agreement in any respect shall not be deemed a waiver of any further
or future rights.
11. Survival of Representations and Warranties. The representations,
warranties, acknowledgements and agreements of FAS and the Company shall
survive the termination of this agreement.
12. Governing Law. This Agreement shall be construed according to the laws
of the State of New York and subject to the jurisdiction of the courts of
said state, without application of the principles of conflicts of laws.
13. Successors. This Agreement shall be binding upon the parties, their
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed or caused these
presents to be executed as of the day and year first above written.
FAMOUS FIXINS INC.
By: /s/ Jason Bauer
------------------------------
Name: Jason Bauer
----------------------------
Title: President
---------------------------
FIRST ATLANTA SECURITIES, LLC
By: /s/ Vincent s. Sbarra
------------------------------
Name: Vincent S. Sbarra
Title: Vice President of
Capital Markets
<PAGE>
ADDENDUM A
to
Finder's Agreement between
Famous Fixins Inc. and First Atlanta Securities, Inc.
Dated September 9, 1999
Prepared by Vincent S. Sbarra
as of _________, 1999
EXHIBIT 10.21
CONFIDENTIAL TREATMENT REQEUSTED BY FAMOUS FIXINS, INC.
Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24(b)(2) under the Exchange Act. In
accordance with Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 21st day of September
1999, by and between Famous Fixins, Inc. ("Licensee"), a corporation
organized under the laws of the State of New York, having its principal place
of business at 250 West 57th street, Suite 2501, New York, NY 10107, and JAE
Endorsements Inc. ("Licensor"), for the personal services of John Elway
(Talent).
WHEREAS, Licensee manufactures celebrity food products and has been
granted the exclusive right to the use of the name and likeness of John Elway
on and in connection with the development, manufacture, distribution,
promotion, and sale of a limited edition cereal product endorsed by Licensor
("the Product").
NOW THEREFORE, in consideration of the mutual promises and undertakings
contained herein, and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee the right to
use the name, photograph, characterization, likeness, voice, image, and
biographical data of John Elway, and the trademarks, logos, copyrights and
all other authorized material owned or controlled by the Licensor (the
"Licensed Subject Matter") in connection with the development, manufacture,
distribution, promotion, and sale of the Product. Additionally, the Company
will produce and sell related merchandise, specifically t-shirts,
sweatshirts, and hats ("Licensed Goods"). This License shall be effective
Worldwide beginning on the date first written above and continuing until
December 31, 2000, (the "License Term"), unless terminated in accordance with
the terms and conditions of Paragraphs 8 or 9 of this Agreement. If sales of
the Products reach 1,000,000 boxes, the License Term shall be automatically
extended, and shall end on December 31, 2001.
2. Licensee's Obligations. Licensee shall undertake to use its best
efforts to develop, manufacture, distribute, promote, and sell the Product
and Licensed Goods, provided however, that Licensee shall have the right to
determine: (a) the type and quantity of Products developed and manufactured;
(b) the markets in which the Products are distributed and sold; (c) the
manner of distribution and sale of the Products; and (d) the volume and
nature of advertising for the Products. Licensee shall submit for Licensor's
approval the type of cereal, the name of cereal, the packaging design,
advertising material, and all other materials to be used in connection with
the Products subject to the sole and absolute approval of Licensor which
shall not be unreasonably delayed or withheld. Licensee shall pay all costs
and expenses in connection with the development, promotion, manufacturing,
packaging, shipping, distribution, sales and promotion of the Products.
Licensee shall handle all fulfillment (including all check, money order and
credit card transactions) and tracking responsibilities from the sale of
other related merchandise from the back panel or elsewhere on the packaging
or promotional materials of the Products. All rights, titles, and interests
in and to the Products, their formulae and secret ingredients, and their
packaging and labeling shall be, and they are specifically and entirely,
reserved to Licensee and may be fully exploited without regard to the extent
to which such rights may be competitive with this Agreement or the rights
granted hereunder. Licensee shall provide 1000 flat cereal boxes to Licensor
to be used at his discretion.
3. Licensor's Obligation. Licensor will personally autograph 25
flat cereal boxes for Licensee to use as promotional giveaways, not to be
used for resale.
4. Quality Assurance. Licensee agrees that all use of the Licensed
Subject Matter shall be only upon the Products manufactured by or for
Licensee in accordance with quality standards approved by Licensor prior to
the commencement of manufacturing of the Products. Licensee shall submit for
Licensor's sole and absolute approval the type of cereal, the name of cereal,
the
1
<PAGE>
packaging design, advertising material, and all other materials to be
used in connection with the Products subject to the sole and absolute
approval of Licensor which shall not be unreasonably delayed or withheld.
5. Compensation. As full and complete compensation to Licensor for
entering into this Agreement, Licensee shall pay Licensor a licensee fee via
cashier's check or wire transfer (the "Licensing Fee") in an amount equal to
***** percent (*****%), approximately $.25 per unit, of all monies received
by Licensee as revenue derived from the sale of the Products ("Gross
Receipts" less slotting fee). Licensor will also receive ***** percent
(*****%) of net proceeds (net of expenses actually paid at arm's length to
independent third parties) from the sale of all related merchandise (subject
to Licensor's sole and absolute approval) from the back panel and other
promotional materials. In addition, as further consideration for this
Agreement, Licensor will receive a warrant to purchase ***** shares of the
Company's unregistered common stock at the purchase price of $***** per share
(the "exercise price"). An additional ***** will be in the name of Jeff
Sperbeck. All warrants granted herein shall have an expiration date of five
(5) years from the date of the signing of this Agreement. If License Term is
automatically extended as defined in paragraph 1, Licensor will be entitled
to an additional ***** warrants using the same terms as defined above. An
additional ***** will be in the name of Jeff Sperbeck. Licensor will
receive piggyback registration rights on the Company's next registration
statement to be filed with the SEC. All cash compensation under this
Agreement shall be paid to Licensor on a quarterly basis.
6. Accounting. Licensee shall render a detailed accounting to
Licensor 28 days after the end of each quarter. Each accounting shall show
both period and cumulative Gross Receipts for the Products and shall be
accompanied by the payment in full then due to the Licensor. Licensor, or
Licensor's representative shall have the right at all reasonable times and on
reasonable notice to inspect and make copies of the Licensee books and
records of Licensee, at Licensor's expense, in so far as they relate to the
computation of royalties to be paid to Licensor thereunder and the shipment
of endorsed products and related merchandise pursuant to this Agreement. In
the event that such inspections show an unreporting and underpayment in
excess of ten percent (10%) for any twelve month period then Company shall
pay the cost of such examination
7. Insurance. Licensee maintains $8,000,000 in product liability
insurance, which cover all products produced by Licensee bearing John Elway's
name and likeness. Licensee will supply evidence of product liability
insurance on a timely basis (i.e. Certificate of Insurance) and shall name
John Elway as additional insured's. Additionally, Licensee will maintain a
$20,000,000 umbrella policy naming John Elway as an additional insured.
8. Licensor Termination. Licensor may terminate this Agreement upon
forty-five (45) days written notice if (a) Licensee breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
its receipt of written notice of the breach; (b) Licensee becomes insolvent
or files a petition in bankruptcy; (c) Licensee permanently discontinues
production and distribution of the Products; or (d) Licensee breaches a
material term of this Agreement in the License Term, regardless of cure.
9. Licensee Termination. Licensee may terminate this agreement upon
forty-five (45) days written notice if (a) Licensor breaches a material term
of this Agreement and fails to remedy said breach within thirty (30) days of
his receipt of written notice of the breach; (b) Licensor becomes insolvent
or files a petition in bankruptcy; (c) Licensee determines, in its sole and
absolute discretion, to discontinue production and distribution of the
Products; (d) John Elway becomes the subject of public dispute or scandal
that materially and adversely affects John Elway's image. Injury(ies) or
illness of said Licensor shall not in any way effect the validity of this
Agreement. If this Agreement shall be terminated for any reason or expire as
herein provided, Licensee
2
***** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
<PAGE>
nevertheless may continue to exercise its rights under this Agreement for 60
days from the date of termination or expiration for the sole purpose of
disposing of its inventory of Products on hand and in the process of
manufacture, including Products returned to Licensee's inventory after
termination or expiration. Licensor shall be duly compensated in accordance
with the terms of this Agreement for any and all such sales of inventory
after the termination or expiration.
10. Indemnification. The parties hereto shall indemnify, defend,
protect, and save and hold each other harmless from and against any and all
actions, claims, suits, losses, judgements, penalties, liabilities, damages,
costs and expenses, including, without limitation, reasonable attorney's fees
and court costs, of whatever kind and nature imposed on, incurred by, or
asserted, made, brought, or made against each other arising out of a party's
breach of any of its representations, warranties, or obligations made
pursuant to this Agreement, or through the gross negligence or intentional
wrongful acts of its officers, directors, employees, or representatives.
Licensee agrees to indemnify and hold harmless Licensor and Talent from any
and all third party claims, actions, suits, demands, loses, damages and all
costs and expenses including, but not limited to reasonable attorney fees
which Licensee may hereafter incur in connection with, or arising out of
Licensor's or Talent's good faith performance of its obligations undertaken
herein, except for negligent acts or intentional misconduct of Licensor of
Talent, provided that Company shall be given prompt notice thereof.
11. Assignment. Neither Licensor nor Licensee shall assign this
Agreement without the prior written consent of the other party, except that
Licensee shall have the right to assign this Agreement to any wholly owned
subsidiary, or to any person, firm, or corporation owning or acquiring a
substantial portion of Licensee's stock or assets.
12. Notices. Any notice to be hereunder shall be made in writing and
shall be sent by certified U.S. mail, return receipt requested, postage paid.
All notices to Licensor shall be sent to John Elway, c/o Jeff Sperbeck, 2121
N California Blvd, Suite 845, Walnut Creek, CA 94596. All notices to
Licensee shall be sent to Jason Bauer, c/o Famous Fixins, 250 West 57th St.,
Suite 2501, New York, NY 10107.
13. Relationship of the Parties. Nothing in this Agreement shall be
construed to (a) give either party the power to direct or control the day to
day activities of the other; (b) constitute the parties as partners, joint
ventures, co-owners, or otherwise as participants in a joint and common
undertaking; or (c) constitute Licensor, its agents, or employees as the
agents or employees of Licensee or to grant them any power or authority to
act for, bind or otherwise create any obligation on behalf of Licensee for
any purposes whatsoever.
14. Governing Law and Jurisdiction. This Agreement shall be
construed and enforced in the County of New York in accordance with the laws
of the State of New York. In the event of any action, suit, or proceeding
concerning, arising out of, or based upon this Agreement brought by either
party against each other, the prevailing party shall be entitled to recover
from the other its reasonable attorney's fees in connection therewith in
addition to the costs of such action, suit or proceeding.
15. Entire Agreement. This Agreement set forth the entire
understanding of the parties with respect to its subject matter. No waiver,
modification, or addition to this Agreement shall be valid unless reduced to
writing and signing by both parties. If any provision of this agreement
shall be held void, voidable, invalid, or inoperative, no other provision of
this Agreement shall be affected as a result thereof, and, accordingly, the
remaining provisions of this Agreement shall remain in full force and effect
as though such void, voidable, invalid, or inoperative provision had not been
contained therein. Notwithstanding the foregoing, in the event any provision
is held void, voidable, invalid, or inoperative and impairs Licensee's right
to manufacture,
3
<PAGE>
distribute, promote, or sell the Products, then Licensee may, upon notice to
Licensor, terminate this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement in New
York, New York, on this day and year first above written.
LICENSEE: FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------------
Jason Bauer, President
LICENSOR: JAE ENDORESEMENTS, INC.
By: /s/ John Elway
----------------------------
John Elway, President
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRCATED FROM FINANCIAL
STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 19,500 245,840
<SECURITIES> 0 0
<RECEIVABLES> 13,613 651,733
<ALLOWANCES> 0 0
<INVENTORY> 27,420 71,545
<CURRENT-ASSETS> 110,533 1,029,243
<PP&E> 15,137 13,578
<DEPRECIATION> 2,317 1,559
<TOTAL-ASSETS> 128,070 1,045,221
<CURRENT-LIABILITIES> 298,641 800,657
<BONDS> 0 0
0 0
0 0
<COMMON> 6883 10,462
<OTHER-SE> (202,707) 193,073
<TOTAL-LIABILITY-AND-EQUITY> 128,070 1,045,221
<SALES> 276,006 1,197,186
<TOTAL-REVENUES> 311,353 1,197,186
<CGS> 193,143 688,817
<TOTAL-COSTS> 193,143 688,817
<OTHER-EXPENSES> 734,158 631,980
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 14,026 3,402
<INCOME-PRETAX> (629,974) (127,013)
<INCOME-TAX> 669 1,334
<INCOME-CONTINUING> (630,643) (128,347)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (630,643) (128,347)
<EPS-BASIC> (.10) (.014)
<EPS-DILUTED> (.10) (.013)
</TABLE>
